THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
OTTAWA, Thursday, May 10, 2012
The Standing Senate Committee on National Finance met this day at 2 p.m. to study the subject-matter of all of Bill C-38, an Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures, introduced in the House of Commons on April 26, 2012.
Senator Joseph A. Day (Chair) in the chair.
The Chair: We resume our study of the subject matter of Bill C-38, an Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.
Honourable senators, as you are aware, we have been given the order of reference by the Senate to study the subject matter of Bill C-38. This is the first of what we expect will be two budget implementation bills following the budget of March of this year. We will probably have the other budget implementation bill in the fall of this year. The one we are dealing with, Bill C-38, comprises 424 pages, and it covers many different areas of the budget, as well as certain measures that are not in the budget, as is indicated by the title of the bill.
We started yesterday asking government officials to go through this bill clause by clause to help us understand what is there. In the past, we have missed a few clauses, and it has caused us some disappointment after we agreed to pass the bill, so we want to make sure we understand what each of the clauses is attempting to achieve.
We have 38 witnesses today who will be appearing in the next one and a half hours. After there has been an explanation of the section by our particular witness, I will look around to see if anyone wishes an explanation or further dialogue on that particular section. We were quite lenient yesterday — I was going to say "liberal" — in our interpretation and the questions, but I do remind honourable senators that we have to go through this bill in order to do a clause-by-clause study of it. Please try to keep your questions, if you have any, to understanding the particular section of the bill that we are looking at and its relationship to the overall bill that may be amended.
Honourable senators, today we will start with Part 2 of the bill. Part 2 is not divided into divisions, so it should move along fairly well. Some of the other parts are so large that they have several divisions. Part 2 is Excise Tax Act, and it starts at clause 19, which is on page 14.
I am pleased to welcome Lucia Di Primio, Chief, Excise Policy, Sales Tax Division; and Pierre Mercille, who we have met before but he wanted to come back and see us again. He is Senior Legislative Chief, Sales Tax Division. Shall we start with clause 19, or do you have some introductory remarks?
Pierre Mercille, Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance Canada: Yes. Part 2 of this bill introduces amendments to both the GST and HST and the excise taxation. Given the structure of the bill, the amendments in the act have to follow the structure of the bill, but we think it may be more appropriate to do the GST amendment first and then after that do the excise amendment. I can gladly give you the clause number for every description I will give.
Also, some of the amendments in the health sector cover more than one clause, and they are not necessarily consecutive. I would propose to give you an explanation of the measure and give you the clause number. We will cover all the clauses in this part.
The Chair: When you are giving us the explanation, Mr. Mercille, we will be looking at the clause and reading it to see if we understand what you are saying.
Mr. Mercille: I can give you the clause before giving my description.
The Chair: I think that would be a good idea.
Mr. Mercille: Some of them are 10 clauses at the same time.
The Chair: You can tell us that. Thank you.
Mr. Mercille: With respect to the GST/HST amendment in this part, I would first say as background that the GST/HST generally applies on all supply of property or services made in the course of a business of any sort unless there is a specific exclusion in the legislation for it. This bill adds a few more exclusions in the health care sector, so first I would like to talk about the health care measures in this bill. The first one I am going to talk about is in clause 29.
The Chair: Clause 29 is on page 21.
Mr. Mercille: Basically, the amendment exempts pharmacists' professional services from the GST/HST. For example, these services can include ordering and interpreting lab tests, administering medication and vaccinations or changing drug dosages. That is the description of the amendment in clause 29.
The Chair: Is that new, then?
Mr. Mercille: That is new. Previously, those pharmacists' professional services were taxable.
The Chair: This is one area where there is less tax than there was in the past, or there will be once we pass this, assuming we pass this.
Mr. Mercille: That is the case for all the amendments in the health care sector I am going to talk about.
The Chair: Thank you.
Mr. Mercille: Also in respect to pharmacists, and this is clause 30 immediately following, currently, under the Excise Tax Act, a prescribed list of diagnostic health care services, such as blood tests, are exempt from the GST/HST when ordered by certain health care professionals like doctors, dentists or registered nurses. The amendment in clause 30 basically amends the GST legislation to expand the exemption for these diagnostic services to include those ordered by pharmacists when the pharmacist is authorized under provincial legislation to do so.
The next amendment is one with many clauses, and it is exactly the same amendment for all of them. The clauses are 32 to 35, 37 to 40 and 42 and 43.
Part 2 of this bill amends the Excise Tax Act by expanding the list of GST/HST zero rated medical devices that are specially designed to assist individuals in coping with a chronic disease or illness or a physical disability, including for all those clauses I mentioned, the circumstances with which certain devices can be zero rated.
Specifically for those clauses, the list of zero rated medical devices is expanded to include certain devices supplied under a written order of a registered nurse, an occupational therapist or a physiotherapist as part of their professional practice. Before, the supply of those devices was only zero rated when supplied on order of a medical doctor.
For those who do not know, the expression "zero rated" in the GST legislation means tax at the rate of zero. It basically means "relieved from tax."
I will move to clause 41 now. This is to add a device to the list. The list of zero rated medical devices expanded to include blood coagulation monitoring and metering devices and associated test strips and re-agents. This is an amendment that parallels the amendment that was discussed yesterday in the Income Tax Act.
I will now move to clause 36. The list of zero rated medical devices is also expanded to include corrective eyeglasses or contact lenses supplied under the authority of an assessment record produced by a person who is entitled under the law of a province in which the person practices to produce the record authorizing dispensing of corrective eyewear.
Basically, this is because with recent provincial law changes, opticians have been authorized in certain circumstances to conduct a vision assessment and produce a record of that assessment. The record of that assessment in certain provinces allows for the dispensing of corrective eyewear. Before, you had to be an eye care professional to be able to issue a prescription for eyeglasses.
The next amendment I am going to talk about is in clause 31. The amendment basically adds the drug isosorbide-5-mononitrate to the list of GST/HST zero rated non-prescription drugs that are used to treat life-threatening disease. In this particular case, this drug is used to treat congestive heart failure.
The Chair: Did you say clause 31?
Mr. Mercille: Yes. You will see it adds the term "isosorbide-5-mononitrate."
The Chair: I do not see that in clause 31.
Mr. Mercille: It is at the top of page 22.
The Chair: That tiny writing there. I was looking at the heavy print. I am sorry; I missed that. No wonder I missed that. Thank you.
Mr. Mercille: The ones I described were the health-related amendments to the GST. The next one I will talk about is in clause 22. Basically this amendment allows charities and qualifying non-profit literacy organizations prescribed by regulation to claim a rebate of the GST and the federal component of the HST. They pay to acquire printed books to be given away for free.
Before, they could not get the rebate under those circumstances. Generally, that rebate does not apply to books purchased for resale. Because of a technical glitch, giving away something was treated as a sale under the Excise Tax Act.
The Chair: Senator Buth would like a clarification of what you have spoken about. She is a senator from Manitoba.
Senator Buth: I am curious about clause 31 and the addition of isosorbide-5-mononitrate. This, essentially, exempts the drug from the GST?
Mr. Mercille: It zero rates the drug. Basically it is non-taxable.
Senator Buth: What is the difference between "zero rated" and an exemption?
Mr. Mercille: The difference is how the supplier of the supply is treated. When something is zero rated, that means it is taxable at zero. For every input purchased by the supplier when he pays tax on something, he claims something called an input tax credit. He basically claims all the tax back. This is zero rated.
An exemption works a bit differently. An exemption basically means that the consumer that receives the service does not pay tax, but the supplier, if he incurs tax when he purchases taxable inputs, is not allowed to recover that tax.
Senator Buth: Can you then explain to me how drugs are added to this list?
Mr. Mercille: The criteria that is used is basically if you have prescription drugs that are issued under prescription, they are covered but not by that clause. Where we list them in the legislation is because they are non-prescription drugs, but they are used to treat life-threatening diseases.
Senator Buth: You could purchase them over the counter or behind the counter, even if you did not have a prescription. Is that how you define that?
Mr. Mercille: Yes. You do not need a prescription to purchase them, but I am not sure of the circumstances of exactly where these are dispensed by pharmacists in this case. I am not sure.
Senator Buth: What is the process you go through in order to have a drug added?
Mr. Mercille: Generally it is representation by the industry. In this case, I understand that someone asked the CRA why this one was not zero rated. They said it was a question for the Department of Finance, so they issued it to us and we looked at it.
In this particular case, one of the reasons it is zero rated is because it is very close to another drug that does the same thing, isosorbide dinitrate. Basically, it was already on the list. Since that one was similar, we decided to add it to the list.
Senator Buth: Thank you.
Senator Rivard: Mr. Mercille, what is the impact of all the items that we have been dealing with? What is the total amount of taxes that consumers will save on the various items? Can you give us an estimate? Are we talking about hundreds of thousands of dollars or a few million dollars?
Mr. Mercille: The amount is stated in the budget at page 381. It includes all the measures I have mentioned about the health sector. The cost for 2012-13 was $3 million, for 2013-14, $3 million, for 2014-15, $4 million, as well as $4 million for the following years, for a grand total of $18 million over 5 years.
Senator Rivard: After our budget, will all the provinces that have a sales tax — which is all of them except Alberta — exclude the same products as us, or is it up to them to choose? For example, Quebec applies its sales tax to books, but they are excluded at the federal level. Is it automatic, meaning that, if this budget is passed, the provinces will apply the same exemptions?
Mr. Mercille: There are two types of provinces. There are those that have a harmonized sales tax, the HST; those provinces automatically apply the same exemptions because they have agreed to have the same tax base as the federal government. Quebec has signed a similar agreement recently and will therefore have a similar regime since it has agreed to follow the changes made at the federal level. As far as the other provinces are concerned, those that have their own sales tax, it is up to them to decide which items are taxable.
Senator Rivard: As far as you know, do the provinces that do not apply the harmonized sales tax generally follow the federal regime or not?
Mr. Mercille: That varies on a case-by-case basis, and it really is a provincial decision.
Senator Callbeck: I thought that when you were dealing with clause 22 on claiming the GST/HST rebates on books you mentioned literacy organizations, but I do not see it here on page 16.
Mr. Mercille: No, because the intention is that they be prescribed by regulation. To prescribe entities by regulation, we need information about them; their exact legal name and things like that. Some organizations have already made the request to receive that rebate, and we will proceed in the near future to propose amendments to the regulation to add those entities.
Senator Callbeck: It will be in those regulations that literacy organizations can claim the rebate? There will be a definition there?
Mr. Mercille: Yes. The regulation will name entities whose main objective is the promotion of literacy. They have to be a charity or a qualifying non-profit organization, which is a non-profit organization that has government funding of more than 40 per cent. There will be regulations following the passage of this bill.
The Chair: Mr. Mercille, I think you were at clause 22 talking about GST/HST.
Mr. Mercille: We have finished clause 22 and I will now talk about clauses 20 and 44. Those two clauses provide amendments to the Excise Tax Act to implement a legislative requirement relating to the Government of British Columbia's decision to exit the HST framework, so essentially the amendment removes the reference to British Columbia in the Excise Tax Act.
If you look at the amendment, you will not see British Columbia because the name "British Columbia" has been removed in the legislation.
The Chair: It was the HST that they decided not to participate in, was it not?
Mr. Mercille: Yes. The HST is imposed under the Excise Tax Act. There is a federal component of 5 per cent and the provincial component in B.C. was 7 per cent.
The Chair: That is clause 20. Is 44 similar?
Mr. Mercille: Clause 44 is the schedule with the name of the province with the associated rate next to it, and that reference has been removed.
The Chair: Is clarification required?
Senator Ringuette: When B.C. decided to join the harmonized sales tax, they received a federal benefit to make the transition. How much was that and how much of it was recovered?
Mr. Mercille: The transitional assistance that the Government of British Columbia received was $1.599 billion.
Senator Ringuette: Billion?
Mr. Mercille: Yes, $1,599 million. Under the terms of CITCA, if they were going to reinstate a provincial sales tax they would have to repay the money. An agreement was reached to repay over five years in equal installments of one fifth of the amount. They have already started repaying the amount.
Senator Ringuette: When did they start the repayment?
Mr. Mercille: I believe it was February or March of this year.
Senator Ringuette: This year is year one?
Mr. Mercille: The first of five payments was made this year.
The Chair: Can you tell us what the interest rate is on that outstanding loan?
Mr. Mercille: My understanding is that there will not be interest charged to the province.
Senator Callbeck: Where does that $1.6 billion go when it comes back?
Mr. Mercille: It goes into the Consolidated Revenue Fund of Canada.
Senator Rivard: Are those tax exemptions generally requested by the manufacturers of those items, by provinces or by insurers? Have there been any requests made by any of those groups, or is it Health Canada that decides on its own that it would be a useful measure for consumers? Where do the requests come from?
Mr. Mercille: Generally speaking, representations are made by industry associations. In the case of pharmacists, there is a Canadian association of pharmacists that made representations. Usually, we get representations from various organizations, such as associations of health professionals. They may also come from the manufacturers of medical equipment but, generally speaking, the requests do not come from individual companies but from associations.
Senator Rivard: In fact, we decide to exempt some equipment, some pharmaceutical products, but not others. Is it Health Canada that decides whether such a measure would be reasonable or not?
Mr. Mercille: Yes. We also have to be careful because a given piece of equipment might be used for medical purposes as well as non-medical purposes. It is in those situations that we want a health professional to write a prescription stating that it would be beneficial for the individual to have a hospital bed at home, for example.
The Chair: Thank you. Carry on, Mr. Mercille.
Mr. Mercille: The next amendment, which is the last amendment in the GST/HST area, covers many clauses, and they are spread throughout the bill. They are clauses 21, 23 and 47 to 51. These clauses provide amendments to the Excise Tax Act and related regulations to implement change to the tax treatment of rental vehicles temporarily imported by Canadian residents. The amendment fully relieves the GST/HST on foreign-based rental vehicles temporarily imported by Canadian residents who have been outside of Canada for at least 48 hours and levies the GST/HST on a partial basis only if the Canadian resident has not been outside Canada for at least 48 hours.
In that case, there is a set amount per week that is determined under the legislation. This amount, for example, for cars, is $200. If a Canadian resident enters Canada with a foreign-based rental vehicle and intends to be in Canada for two weeks, they will pay tax on $400.
The Chair: Is this rental or lease, or only rental?
Mr. Mercille: The vehicle cannot be in Canada for more than 30 days and I think the lease cannot exceed six months. Usually in the business I think rental is considered short term, while a lease is long term.
This is the last GST/HST amendment. If there are no questions on that, Ms. Di Primio can talk about excise taxation measures.
The Chair: Do clauses 21, 23 and 47 to 51 all relate to automobiles rented in the U.S. and brought into Canada?
Mr. Mercille: It also applies to pickup trucks, sport utility vehicles, vans and recreational vehicles such as motor homes. All of those amendments are required to provide this particular relief.
The Chair: That one concept?
Mr. Mercille: Yes.
Senator Callbeck: It says here that clauses 27 and 28 relieve the GST/HST, the green levy on fuel inefficient vehicles. What is the green levy?
Mr. Mercille: This is not part of the GST/HST. Ms. Di Primio can explain the excise taxation measure, which this is.
Senator Callbeck: Will we do that later?
Mr. Mercille: We can do it immediately.
Lucia Di Primio, Chief, Excise Policy, Sales Tax Division, Department of Finance Canada: There are other measures in Part 2 of the bill that include proposed amendments relating to the green levy on fuel-inefficient vehicles, as well as the excise tax on automobile air conditioning units.
To answer the question, I can briefly describe what the green levy is. It is an excise tax on fuel-inefficient vehicles, and it applies to automobiles designed primarily for passenger vehicles and it applies in accordance with the vehicle's fuel efficiency rating, which is a weighted average — 55 per cent of city fuel consumption and 45 per cent of highway fuel consumption.
Senator Ringuette: Which clauses are those?
Ms. Di Primio: The first measure is very similar to proposed GST relief for foreign-based rental vehicles. Some of the definitions are in clauses 25 as well as clauses 27 and 28.
Similar to Mr. Mercille's explanation, both the green levy and the excise tax on automobile air conditioners would be fully relieved on foreign-based rental vehicles that are temporarily imported into Canada by Canadian residents for non-commercial purposes and for no more than 30 days.
Those three clauses deal with that one measure.
Senator Callbeck: Did you say the green levy relieves the GST and HST on fuel-inefficient vehicles; what about fuel-efficient vehicles?
Ms. Di Primio: The green levy does not apply to fuel-efficient vehicles.
The Chair: The policy behind the green levy is for owners of fuel-inefficient vehicles to pay more.
Ms. Di Primio: Yes, to be subject to an excise tax. It applies at the manufacturer level, new vehicles manufactured in Canada, as well as vehicles imported into Canada.
The Chair: Is that paid at the time of importation or entry?
Ms. Di Primio: It is actually paid by the manufacturer, or at the time of importation. In most instances, the manufacturer would embed it in the price and pass it on to the consumer.
There is another measure. I will be speaking to one of the definitions in clause 25, as well as clause 26. These proposed amendments ensure that the application of the green levy will not change, even though the Minister of Natural Resources recently announced that the testing requirements for vehicle fuel consumption will be changing. These proposed amendments ensure that the green levy will continue to be determined by reference to the current test method used to measure fuel efficiency ratings.
The Chair: That means two test methods will be imposed on manufacturers, which will push up the price of vehicles.
Ms. Di Primio: I cannot speak to what manufacturers would do to the price of vehicles, but as I understand from the announcement of the Minister of Natural Resources, currently the fuel consumption data in the EnerGuide is based on a test method that uses two test cycles: A city test cycle and a highway test cycle.
The announcement says they will be moving to five test cycles. The additional test cycles would include tests to take into account aggressive driving, use of air conditioning, and cold temperature operation of a vehicle. These proposed amendments ensure that the green levy will continue to be determined by reference to the two-cycle test information and not the new five-cycle test information that, according to the announcement, is supposed to come into effect for 2015 model-year vehicles.
Senator Callbeck: Regarding the green levy, how much are we talking in terms of dollars?
Ms. Di Primio: About $30 million a year.
Senator Callbeck: How much is that on a vehicle?
Ms. Di Primio: The green levy rate ranges from $1,000 to $4,000, in $1,000 increments, depending on the vehicle's fuel efficiency rating.
There is one other measure that can be found in clauses 19, 24, 45 and 46 of Part 2. This is very similar to a measure described yesterday in relation to the Income Tax Act. It essentially relieves the Minister of National Revenue of the requirement to issue a demand by certified and registered mail. It is simply to ensure consistency across all federal taxation statutes. The demand could be issued, for example, by regular mail instead of registered or certified mail.
The Chair: We looked at a similar clause yesterday, as you said.
Ms. Di Primio: That concludes all of the clauses in Part 2 of the bill.
The Chair: Which clauses should we be referred to for the last concept of the minister being relieved of sending registered mail?
Ms. Di Primio: It is clause 19 in relation to the non-GST portion of the Excise Tax Act; and clause 24 in relation to GST-HST legislation, as well as clauses 45 and 46, one in relation to the Air Travellers Security Charge Act and one in relation to the Excise Act 2001.
There are no other clauses in Part 2 of the bill.
The Chair: In Part 2 of the bill, you have nothing further to talk to us about, but there are other clauses that someone else will talk to us about.
Mr. Mercille: No, we have covered all the clauses in Part 2.
The Chair: Have you talked to us about the Air Travellers Security Charges Act?
Ms. Di Primio: This would be the relieving the Minister of National Revenue of the requirement to issue a demand for a return by registered or certified mail; the minister can now issue that demand by regular mail, for example.
The Chair: For security charges, as well. Okay.
Senator Ringuette: Are there any other GST/HST excise tax-related issues in this bill?
Mr. Mercille: There is in this bill an amendment to the Food and Drugs Act, which is in division 19. I would like to let the people from Health Canada explain what the change is. Basically there is a consequential amendment to the Excise Tax Act because, from what I understand from the change, there is a list of zero-rated drugs that is in a schedule of a regulation and they are moving the list into a list that is published on their website. We just want to make the right cross-reference to that list. It is so that those drugs remain zero-rated. This is one amendment.
Another amendment that is not in Part 2 and it is not an amendment itself in the GST legislation because none is required — it is in division 44, I believe, of Part 4. The budget announced on page 441 that, basically, there would be an increase in the travellers’ exemption. The amendments are made to the custom tariff. The Excise Tax Act just refers to the custom tariffs. When there are changes made there, they are automatically made under the Excise Tax Act.
Senator Ringuette: Who will be coming before us to discuss this issue?
Mr. Mercille: It would be colleagues from our department, but from the International Trade and Finance Branch of the Department of Finance.
Senator Ringuette: Will they come before us to talk about this?
Mr. Mercille: When you are talking about division 44 of Part 4.
The Chair: The clauses under 40, 47, 48 and 49 show a number of formulas. This is with respect to regulations under the act.
Mr. Mercille: Yes. Basically this is in respect to the rental vehicle that I discussed before. In the GST-HST legislation, there is a regulation that talks about non-taxable importation.
When the Canadian resident has been outside Canada for more than 48 hours, it is full relief. Basically, we have made an amendment to the non-taxable importation regulation. There are also amendments to relieve, not just the federal component but the provincial component of the HST on some of the vehicles and impose it on a weekly rate. These are in the regulation, too. This is all linked to the same amendment.
The Chair: It flows through what you have already explained to us.
Mr. Mercille: Yes.
The Chair: On page 30, refresh my memory on the use of the term "harmonized value-added taxes." "Harmonized sales tax" is the term I have used. Am I incorrect?
Mr. Mercille: GST and HST are the colloquial expressions to describe the tax. They are described slightly differently in the legislation.
The Chair: In legislation, the harmonized tax is a harmonized value-added tax, is it?
Mr. Mercille: For example, the HST on a sale in the legislation is referred to basically as the provincial component; it is a tax imposed under 165(2). There is no label next to it. HST, which is the term that everyone uses, is not used itself in the legislation; it is "harmonized value-added tax."
Senator Callbeck: We have already talked about clause 45, but my understanding is that it is not giving CRA any more authority. It is just changing the way that they would issue that demand to file a return. They already have the authority now to do that?
Ms. Di Primio: That is correct.
The Chair: Thank you very much. We appreciate your help on HST, GST, excise tax and harmonized value-added tax.
We will bring the new panel on. We are skipping Part 3. That has been referred to another committee, so we will go to Part 4.
From Department of Finance, we have Gordon Boissonneault, who will help us with Division 1. We will deal with Division 1 first and then go on to Division 3.
Mr. Boissonneault, can you take us through Division 1 of Part 4?
Gordon Boissonneault, Senior Advisor, Economic Analysis and Forecasting Division, Demand and Labour Analysis, Department of Finance Canada: I can deal with the clauses under this division in two sections. Clauses 170 to 192 of Division 1 amend a number of acts to eliminate the requirement of the Auditor General of Canada to undertake annual financial audits of certain entities and to assess the performance reports of two agencies. The government is making these changes at the request of the Auditor General of Canada. The AG proposed these amendments as cost-savings measures that will result in a more consistent treatment of all federal entities. They will allow the Office of the Auditor General to reallocate resources to core priorities.
There are 12 legislative amendments in this section. The majority remove the requirement for the AG to undertake annual financial audits of certain federal entities from their enabling legislation. This will result in a treatment of these organizations that is consistent with that of other federal departments. This is because the government previously had decided not to require audited financial statements of individual departments and department-like organizations.
These departments and organizations are still subject to scrutiny as part of the annual audit of the summary financial statements of the Government of Canada. As well, these organizations will still be subject to periodic performance audits by the Auditor General. This set of amendments in this part of the BIA also removes the requirement for the Auditor General to conduct assessments of performance reports of two agencies: the Canadian Food Inspection Agency and the Canada Revenue Agency. These types of assessments were deemed by the Auditor General to be unnecessary and inconsistent with the treatment of other federal agencies.
Changes to these effects are also being undertaken for the Parks Canada Agency, but this is addressed in a different division — Division 9.
The Auditor General will also eliminate financial audits of five other organizations, but they are doing so under their own authority. It is not necessary to include it in the bill.
All of the affected organizations have been consulted about these changes. The remaining clauses in this division, clauses 193 to 204, simply indicate the year in which the audits will end in each of the cases. This is because the Office of the Auditor General has decided to phase out these changes over a two-year period in order to deal with the workforce adjustment implied.
That is it for this division.
The Chair: That last part of your comment — in order to meet workforce adjustments — suggests to me that a lot of these amendments might be brought about because the Auditor General is asked to reduce expenditures from 5 to 10 per cent and this is where the Auditor General found that some funds could be saved. Is that correct?
Mr. Boissonneault: That is correct. The Auditor General was not part of the strategic operating review. However, the Minister of Finance had written to the Auditor General last summer to request that they adhere to the spirit and intent of the review. In response, the Auditor General identified these changes as well as a number of other internal administrative changes that will result in savings. The implication is that a workforce reduction of about 10 per cent, or 60 employees, is envisaged. That includes the effects of these proposed changes as well as other internal adjustments in administration. However, they are planning to make these workforce adjustments entirely through attrition and that is why these changes are being phased in over a two-year period as that attrition occurs.
The Chair: Thank you. That is helpful.
Senator Buth: I was looking and not listening clearly enough. Could you please go over again the Canadian Food Inspection Agency and the Canadian Revenue Act changes?
Mr. Boissonneault: In those two cases, similar to the other organizations, the proposals are to eliminate the annual financial audit. However, in those two cases as well, and I will also mention Parks Canada, those three agencies when set up had a specific requirement for the Auditor General to do an annual assessment of the performance reports they do — not to assess the performance reports but to assess the process behind the performance reports. This is unusual. Other federal agencies do not have that requirement. It was brought into their enabling legislation to enable the Auditor General to assess their performance as they came into existence and in their early years. They have been in place for some time now, so the Auditor General has decided it is no longer necessary to do this perfunctory performance appraisal.
Senator Buth: Which clause is Parks Canada included under?
Mr. Boissonneault: There are a number of other changes dealing with Parks Canada in Division 9, so someone else will speak to you about those, but the result of the changes happening to Parks Canada means that the changes in Division 9 will overtake the similar type of changes happening here.
Senator Ringuette: Chair, this is quite an item here and should very much concern parliamentarians because of the reliance of parliamentarians on the audit of these organizations by the Auditor General of Canada and then he or she reporting to Parliament.
That is a major issue. I am looking especially at the Canadian Food Inspection Agency, which will not have a performance audit. In regard to performance, and the basic necessity of their performance in relation to the quality of food that Canadians have access to, what is the cost of that? What is the cost of removing these audits?
It is really unacceptable. What is the cost of removing these audits?
Mr. Boissonneault: Just to clarify, the audit that is being removed is the financial audit. The performance audits that the Auditor General conducts of all of these organizations will continue as unchanged.
Senator Ringuette: Note number 2 in my briefing book says that the amendment to the Canadian Food Inspection Agency Act will also eliminate the requirement for the AG to assess annually performance reports.
Mr. Boissonneault: It is confusing in the wording. The Canadian Food Inspection Agency does its own performance reporting. Up to now, the AG has been required to assess how the CFIA undertakes that performance reporting. It is not an assessment of performance itself; it is an assessment of how they do performance reporting.
Senator Ringuette: Will the AG audit the performance of the Canadian Food Inspection Agency?
Mr. Boissonneault: Yes.
Senator Ringuette: Will they do that directly?
Mr. Boissonneault: Yes. This is done periodically on a regular cycle, and that will continue.
Senator Ringuette: Let us go, then, to my other question, which is in relation to the cost savings of these measures here.
Mr. Boissonneault: The AG has estimated that when these financial audit activities are discontinued, it will result in an annual savings of $1.4 million annually.
Senator Ringuette: With respect to all these acts requesting an audit and reporting to Parliament, who will now be reporting, and where in the legislation will Parliament be reported to on the financial audit of these entities?
Mr. Boissonneault: The Auditor General conducts annually an audit of the summary financial statements of the government, as you well know. Within that exercise, selectively using risk metrics, they will select where more in-depth auditing needs to occur on a department by department basis. In other words, they audit the government as a whole, and if they deem it necessary to audit in more depth a particular area of government, be it a department or a department-like agency, they do it within the context of that exercise.
Senator Ringuette: Will these entities enter into the cycle of audits of the auditor?
Mr. Boissonneault: Yes. They actually are now part of that cycle, and, in addition, because of the legislative requirements, they are being audited individually as well. In a sense, there is some duplication that is happening here that is deemed to be unnecessary.
Senator Callbeck: There is list here of the 12 entities that will be affected. Are there 14 altogether? That is 14 statutes to be amended to deal with these 12.
Mr. Boissonneault: That is correct.
Senator Callbeck: All right. Thank you.
Senator Peterson: This is just a clarification. This has nothing to do with product labelling or reduction of food inspectors. It just has to do with auditing of CFIA.
Mr. Boissonneault: That is right, financial statements.
The Chair: Will there be any audits that the Auditor General is no longer doing that agencies or departments feel should be done or must be done, and, therefore, they will be going to outside auditors to replace the Auditor General's work?
Mr. Boissonneault: That is a very good question. It is quite possible that in some cases these organizations, based on the views of their boards of directors and their stakeholders, may feel that additional audit is necessary for their particular circumstances. In such cases, we expect they would contract private auditors and recover the costs of that exercise through membership dues and fees.
The Chair: Are you aware of any departments or agencies at this time?
Mr. Boissonneault: I believe that OSFI is considering engaging private auditors to do that.
The Chair: For the purpose of our audience, could you tell us what OSFI is?
Mr. Boissonneault: OSFI is Office of the Superintendent of Financial Institutions Canada. In that case, I should say they are not on this list. However, I did mention there are a few audits that the Auditor General is discontinuing on the basis of their own authority, and OSFI is one of those organizations. They did indicate that, based on the views of their stakeholders, they may engage a private auditor to take up these responsibilities.
Senator Callbeck: On the entities that are listed, Canada Revenue Agency Act, and down below, it says the amendment does not eliminate the requirement for the AG to undertake financial audits.
What happens there now? Is there an annual audit done by the Auditor General? With this amendment, when will the Auditor General do a financial audit?
Mr. Boissonneault: The Canada Revenue Agency is a bit of an exception. Initially, the Auditor General considered eliminating that financial audit as well, but on further consultation with the Canada Revenue Agency, given the particular nature of that organization, they decided to continue to conduct a financial audit of CRA annually.
Senator Callbeck: Will that be every year?
Mr. Boissonneault: Yes, they will continue with that practice every year.
Senator Callbeck: It eliminates the requirement of the AG to assess annual performance reports. Right now, the AG is analyzing or assessing the reports of the CRA. Why will that be eliminated, or who will do that?
Mr. Boissonneault: They deem the exercise to be unnecessary. It will just not be done any longer. Again, it was assessing things like our reports being submitted in a timely fashion, or whether the other reports are complete and comprehensive, that sort of thing. The AG did not feel it was a high priority use of their resources.
Senator Callbeck: Was this the Auditor General's decision?
Mr. Boissonneault: Yes.
Senator Ringuette: In addition to OSFI, which is not on this list and will no longer be audited by the Auditor General, what are the other entities that will not be audited?
Mr. Boissonneault: The Auditor General has decided and has the authority to do this unilaterally, that is, not to audit the Superintendant of Financial Institutions, as I mentioned, the Financial Consumer Agency of Canada, the Public Service Commission of Canada, the National Research Council of Canada and the National Battlefields Commission.
Senator Ringuette: The National Research Council is a major source of taxpayer dollars.
Mr. Boissonneault: Again, all of these changes will result in consistent treatment with all other departments, all other Crown corporations and agencies, which are currently not now subject to this audit requirement.
Senator Ringuette: Will they be getting into the four- or five-year cycle?
Mr. Boissonneault: A four- or five-year cycle for a performance audit, but they will be annually subjected to financial audits within the broader exercise of the audit of the Government of Canada.
Senator Callbeck: Who is on the list? I referred to that list of 12, but the names you read out to Senator Ringuette are not there. There are another 5 besides these 12.
Mr. Boissonneault: That is correct. There is no legislation required for those five. The Auditor General has the authority to discontinue these audits without having to make a legislative change.
The Chair: Seeing no other questions, I thank you, Mr. Boissonneault. We appreciate your clear explanation of Division 1 of Part 4.
Division 2 is being referred to the Banking Committee, so we are now on to Division 3 of Part 4, which I find at page 191. This is about PPP Canada Inc. We have from the Department of Finance Mr. Beaupré and Ms. Lajoie.
Maxime Beaupré, Senior Economist, Sectoral Policy Analysis, Transport and Corporate Analysis, Department of Finance Canada: Division 3 of Part 4 comprises five clauses. They all pertain to PPP Canada, which is a Crown corporation established by order in 2008 as a parent Crown corporation.
At the time of its creation, it was decided not to make PPP Canada an agent of Her Majesty. This division aims at confirming that PPP Canada does not act as an agent of Her Majesty except for certain mandated activities. It is proposed that PPP Canada Inc. be recognized as an agent of the Crown for activities related to the 3P screen on federal capital projects, a screen that was announced in Budget 2008. The provision of advisory services to federal departments on their 3P projects and acting as a source of expertise and advising on 3P projects for departments and Crown corporations. This measure would better align PPP Canada's corporate structures with activities related to its federal business line including providing expert business advice to federal departments.
The key clauses in the division are clause 210, which confirms that PPP Canada is not an agent of the Crown; clause 211, which specifies the activities that I just mentioned, for which PPP Canada would act as an agent of the Crown; and clause 212 is consistent with clause 210 in saying that PPP Canada does not act as an agent and therefore cannot bind the Crown for its other activities other than those mentioned in clause 211.
The Chair: Regarding clause 212, if you were drafting this, which you probably had something to do with, why would you not have that following 210? It is obviously part of the concept in 210. Why do you tuck it away in another section, clause 211?
Mr. Beaupré: You are correct in saying that I was involved in the drafting but I did not draft it, so I cannot tell you why the drafters thought the sequencing of the clauses worked better that way.
The Chair: When you say the entity is not an agent of the Crown, you are saying that in law so that in law judicially, the Crown will not be responsible and be sued for some activity of PPP?
Mr. Beaupré: That is correct; other than for activities taken under clause 211.
The Chair: Is there any other reason for saying that it is not an agent other than the liability issue?
Mr. Beaupré: It is mostly that. At the time of the creation of the corporation, it was felt that it could act and deliver its mandate as a non-agent of the Crown. Experience has shown that its activities under the federal business line were more consistent with those of an agent of the Crown. There are a few examples of that. That is why this change is being proposed.
Senator Ringuette: How much money does this non-agent of the Crown have in a special PPP fund?
Mr. Beaupré: The operating budget of the Crown corporation is $12.7 million in the Main Estimates for this year.
Senator Ringuette: That is operating budget.
Mr. Beaupré: Yes.
Senator Ringuette: I mean your capital project. The special kitty that you have, how much is it worth now?
Mr. Beaupré: The fund was endowed with $1.2 billion as announced in Budget 2007. The Crown corporation draws down money each year. I believe this year it will make its fourth withdrawal from the fund. I do not recall the exact figure but I think it is around $275 million. I believe next year will be the last year that it is drawing down the money from the appropriations.
Senator Ringuette: How many projects does the non-agent of the Crown realize with that money?
Mr. Beaupré: The Crown corporation has launched four rounds of applications. The fourth round is currently ongoing. Under the first three, I think seven projects have been announced and others are being considered by the board of directors as a result of the round that was closed in June 2011.
Senator Ringuette: How many projects?
Mr. Beaupré: The Crown corporation is reviewing those applications and once decisions are made, they will be announced.
Senator Ringuette: How can the Crown corporation review projects that will be funded by a non-agent of the Crown?
Mr. Beaupré: I am sorry; I do not understand the question.
Senator Ringuette: You just said that the Crown will be reviewing these applications and deciding on the projects that it wants to approve.
Mr. Beaupré: The Crown corporation reviews the applications, but the decision remains, depending on the circumstance, either with the Minister of Finance or the Governor-in-Council.
Senator Ringuette: My designation of a kitty fund is quite accurate for a non-agent of the Crown.
The last time that PPP Canada was before the Finance Committee of the Senate, they indicated to us that their operation costs were in the vicinity of $47.2 million, if my memory serves me correctly. You had something like roughly 50 employees. I certainly remember being quite astonished by the fact that operation costs of an average of a million dollars per employee was quite exaggerated for such an entity. Is that the same situation now?
Mr. Beaupré: I do not know what the committee was provided in terms of information last fall, but the budget of the Crown corporation is $12.7 million per year. I believe that was the case last year and it is the case this year. It is true that the size of its personnel is around 40 employees.
Senator Ringuette: You have 40 employees and twelve point some million dollars. How many budget restrictions were you directed to abide by?
Mr. Beaupré: Are you making reference to the expenditure reduction exercise conducted by the government?
Senator Ringuette: Yes.
Mr. Beaupré: PPP Canada was asked to provide a proposal for reduction, and it is listed under Annex 1 of the budget. It is ramping up to half a million dollars in years two and three, so 2013-14 and 2014-15 on an ongoing basis.
Senator Ringuette: Chair, will we have PPP Canada appear before us again on the budget issue?
The Chair: With respect to these amendments that appear before you, we will not. We could well, as a committee, have PPP Canada before us for other purposes, but these are government officials from Department of Finance to explain to us the changes.
Senator Ringuette: I respect that. I also respect that you will not have the answers today for the following questions that I will be asking you, but please direct your answers to the clerk of the committee. She will then provide the answers to the members of the committee.
How many employees in PPP received notice letters of layoffs by province and by classification? How many of them were EXs and how many were DMs? How many staffers in your department are not under the Public Service Employment Act, and under what classification? What is the cost in your department for program management, i.e., what are the total salaries, expenses, bonuses, et cetera, for the management level of your department and programs?
Mr. Beaupré: We will undertake to provide that information to the committee.
Senator Buth: Just a bit of a clarification in terms of the oversight of PPP. You mentioned that projects are reviewed by the Crown, although PPP makes the decision in terms of funding and that the Minister of Finance then approves that funding.
Mr. Beaupré: The Crown corporation has the mandate to review the applications to the fund and identifies them on a merit basis. It then makes a recommendation to the minister as to whether a project should be funded and at what level.
Senator McCoy: Going back to clause 211, for clarity, can you give me an example why it is desirable — in fact, I think you put it a little stronger — that this Crown corporation needs to be an agent of the Crown for what is essentially internal advice?
Mr. Beaupré: As I mentioned, at its creation it was envisioned that the corporation could perform all of its activities without being an agent of the Crown, but experience has shown that the types of activities that would be undertaken for the provision of the advisory services for federal departments was more consistent with those of an agent of a Crown corporation.
For example, the Canada Development Investment Corporation is a Crown corporation that provides services to departments in the management of government assets. This organization is an agent of the Crown.
Senator McCoy: Yes, but so what? Can you not provide internal advice without being an agent?
Mr. Beaupré: It is easier or facilitates the establishment of relationships between the Crown corporations and federal departments as an agent of the Crown.
Senator McCoy: How?
Mr. Beaupré: As an agent it can undertake activities on behalf of the Crown, and obviously federal departments are part of the Crown.
For example, if a department needs pointed expertise on a particular project, PPP Canada can contact private sector participants in the market and acquire this expertise on a competitive basis, but it will be able to do so on behalf of that department.
Senator McCoy: I will leave it there.
Senator Ringuette: Either gentleman can answer this. Has PPP had performance audits by the Auditor General?
Mr. Beaupré: To my knowledge it has not been submitted yet, subject to a performance audit of the Auditor General.
Senator Ringuette: Exactly. Thank you.
The Chair: Would you like to tell us anything further about Division 3? You are okay? We are okay. Thank you very much.
We will go on to Division 4, which deals with territorial borrowing limits. Mr. Daniel MacDonald is already at the table.
Could you tell us about the borrowing limits for the territories? That is page 192, sections 214 onwards.
Daniel MacDonald, Chief, CHT/CST and Northern Policy, Federal-Provincial Relations Division, Department of Finance Canada: Just a bit of background to begin. The Nunavut Act, the Northwest Territories Act and the Yukon Act, all federal acts, currently provide that the territorial governments have the authority to borrow money, for territorial, municipal or local purposes, subject to the approval of the Governor-in-Council. These identical amendments to the Northwest Territories Act in section 214, the Nunavut Act in section 215 and the Yukon Act in 216, provide the authority for the Governor-in-Council, upon the recommendation of the Minister of Finance, to set the maximum amount up to which each territorial government may borrow and to introduce new regulations specifying the definition of borrowing, or other instruments to be included within the purpose of the limit, entities whose borrowing is to be measured and the value to be attributed to each type of borrowing for the purpose of the limit.
As stated in the budget on page 157, the intent of the regulations would be to ensure accurate reporting of obligations of these limits and to ensure consistency with reporting in the territorial public accounts. Establishing these clear rules will assist territories in their fiscal planning.
If I look quickly at the amendments as proposed, the structure is that first we repeal, for each of the territorial governments, the existing language that says they may borrow, upon permission of the Governor-in-Council, and we replace it with the language that says that the Minister of Finance may make recommendation as to what the maximum amount they may borrow up to is.
The second, again repeated in all three clauses, is to introduce the regulation-making power. As stated, it enables those regulations to provide the definition of who may borrow, what borrowing should be and how that will be valued.
The Chair: It looks like there is still Governor-in-Council oversight here. Is that correct?
Mr. MacDonald: That is correct.
The Chair: Previously it was Governor-in-Council without the minister's recommendation?
Mr. MacDonald: It is simply clarifying that the Minister of Finance is the minister making that recommendation to the Governor-in-Council. The Governor-in-Council retains that authority.
The Chair: I think I understand the process. Honourable colleagues appear to as well.
Was there anything that triggered this? Is this just housekeeping that you go through or was there some event that triggered this requirement?
Mr. MacDonald: It was a general development. The Minister of Finance initiated a review of the operation of the borrowing limits in 2010, and it was prompted by the fact that the current statutory authority simply states that borrowing is authorized upon approval of the Governor-in-Council. No other guidance is offered to territorial governments.
They are undertaking significant projects in the North of significant amounts using new arrangements and emphasis on different arrangements. The current structure did not provide the guidance as to how those arrangements and instruments would be handled within the borrowing limit for their fiscal planning purposes to know exactly how particular projects under particular structures would be counted towards the borrowing limit. It would be better to have clarity up front. For that reason, we have introduced these amendments.
Senator Peterson: Just for clarification, it is my understanding that on resource revenue sharing the Yukon has access to the minerals but Nunavut and the Northwest Territories do not. Is that correct?
Mr. MacDonald: That is correct. The Yukon has completed what we term resource devolution, so they have access to oil and gas and mineral revenues.
Senator Peterson: They have that but you still watch over them and tell them how much they can borrow. Are they different from the two, since they do have this revenue that the others do not? Are you working with the others to give them the same rights as the Yukon?
Mr. MacDonald: Negotiations with the Northwest Territories and Nunavut are ongoing. Protocol was signed with Nunavut in 2008 to begin these negotiations.
The Northwest Territories has an agreement in principle and is proceeding towards final agreement negotiations as we speak.
The Chair: Is anything built in to account for inflation? Is there no automatic adjustment to inflation? You have set the upper limit.
Mr. MacDonald: There is no automatic adjustment. It is reviewed on request of the territory.
The Chair: Seeing no other questions, thank you very much. We will move to Division 5, Reporting Requirements. From Treasury Board Secretariat, we have Nicholas Wise, Executive Director, Strategic Policy, Priorities and Planning; and Christiane Allard, Advisor, Strategic Policy, Priorities and Planning.
Nicholas Wise, Executive Director, Strategic Policy, Priorities and Planning, Treasury Board Secretariat: The proposals here reflect ongoing efforts to try to strengthen and modernize the reporting regime in government. This is one element of a generalized attempt. It reflects efforts to ensure that information is made more accessible and is more timely to parliamentarians, but also to reduce the burden imposed on departments to gather some of the information required for these reporting elements.
Clause 218 focuses on section 12.4 of the Financial Administration Act. The proposal is to eliminate an annual report on HR management largely in favour of recognizing the fact that information is available more accessibly and in a more timely manner through other vehicles, including the Public Service Management Dashboard, which is an online repository of the information included in the annual report; the management accountability framework, similarly; and also the clerk's annual report, just to name a few other mechanisms whereby this information is provided in a more timely and accessible way. In a sense, this annual report has become obsolete, so the proposal is to eliminate it.
The Chair: This is clause 218.
Mr. Wise: That is correct.
The Chair: You are proposing to remove section 12.4 of the Financial Administration Act, which is a report laid before Parliament and therefore informs Parliament of quite a number of different things. You say they can gather that information elsewhere in documents laid before Parliament?
Mr. Wise: That is right. It recognizes the fact that the information laid before Parliament is often a bit stale by the time it gets there, given that it is collected on an annual basis. Information included in that report is instantly accessible on the Public Service Management Dashboard, which includes all of the HR-related information that would be included in the annual report,
Clause 219 is more of a technicality. The proposal is to have the term "fiscal year" changed to "financial year." It relates to the fact that there are certain Crown corporations that operate on a slightly different financial year, if I can use that term generically, than the government's traditional fiscal year. There has been confusion, I understand, as to when certain reporting requirements would be brought forth. The inclusion of the generic term "financial year" is the proposal in this clause. It is a legal technicality more than anything else.
The Chair: Please explain to us the difference between "fiscal year" and "financial year."
Mr. Wise: I understand that about 17 or 18 Crown corporations have slightly different beginning and end dates to their business year. The government's traditional fiscal year ends on March 31 of each year. That is not true of a number of Crown corporations. I could not specify the specific financial years of these organizations, but they have different ones. Again, sometimes it causes some confusion and duplication.
The Chair: You are using "financial" to be more generic and "fiscal" specifically for the federal government.
Mr. Wise: That is right. The government's fiscal year does not apply to all Crown corporations noted here.
Parts (2) and (3) of that clause relate basically to the same issue. Proposed subsection 131.1(3) states:
The parent Crown corporation shall cause the report to be made public within 60 days after the end of the quarter to which the report relates.
It used to say "fiscal quarter" but now simply says "quarter" to ensure consistency.
The Chair: What prompted this kind of amendment?
Mr. Wise: Most of this entire division is housekeeping of sorts. It is part of an overall review we have been undertaking to ensure that information provided is timely. We are using some aspects to clear up technical issues more than anything else and repair the legislation to make it clearer. There are organizations subject to it. A number of things are going on here that are part of an overall review that we have been undertaking around reporting to ensure that it is more modernized. I am not sure that is the most appropriate term, but it tends to sum up what we are doing generally.
Clause 220 is a proposal to replace sections 151 and 152 of the financial Administration Act with new section 151, which is a proposal to eliminate an annual report provided on Crown corporations and to ensure the information is provided in annual report that comes to Parliament on a quarterly basis. The idea is to consolidate the information that would be coming annually on a quarterly basis. It would be consolidated with the quarterly financial reports, making those quarterly financial reports more comprehensive while ensuring that the information that comes before Parliament is done so in a timelier manner rather than once a year.
There are two advantages: One is that it precludes the need for organizations, in this case the Treasury Board Secretariat, to compile all of that information on an annual basis, which basically duplicates information. It consolidates it on a quarterly basis to make it more available in a timely manner. It is intended to make the gathering and reporting of that information more efficient and, ultimately, making the quality and usefulness of that information more immediately apparent.
The Chair: I understand the consolidation of the Crown corporations' quarterly reports. Clause 151(1) states:
. . . the annual reports of those corporations that were laid before Parliament under subsection 150(1), in that fiscal quarter.
This would be at the fourth quarter or the first quarter of the next year.
Mr. Wise: Currently, there are summaries of the annual reports tabled separately. Each Crown corporation tables its annual report under its own auspices. This does not affect that. The annual report provided a bit of a summary of those annual reports on an annual basis. Now, those annual reports that come throughout the year to Parliament would be consolidated within the financial quarterlies on a quarterly basis. Again, it is breaking up information that was once provided on an annual basis into four chunks, if you like.
The information there basically illustrates the kind of information that would be consolidated.
The Chair: I understand the consolidation part.
Mr. Wise: Yes. Clause 221 is to repeal section 8 of the Alternative Fuels Act. Again, this deals with a reporting requirement. An annual report is provided that basically says the same thing every year: The use of alternative fuels is not really efficient. This relates to the federal fleet. It is not very efficient, cost-effective and it is difficult to comply with in a sense or difficult, given that so few service stations offer alternative fuels, ethanol, for example.
In essence, it has been discovered that the annual report is relatively costly to produce relative to the value of the information that is provided. It repeats the same information every year and has become a bit stale and obsolete as a result. Again, the idea here is to eliminate the need for it within the context of the Alternative Fuels Act.
Then lastly, clause 222, regarding Public Service Employment Act, really this is just to ensure consistency with the first clause dealing with the elimination of the annual HR management report. It is basically the mirror clause within the Public Service Employment Act to ensure consistency.
The Chair: We have a number of senators who have indicated an interest in talking to you about these particular clauses. Senator Ringuette, from New Brunswick, will be first.
Senator Ringuette: I certainly do not agree with the removal of reporting to Parliament about the management of human resources and the repeal of clause 218 and clause 222 in regard to the Treasury Board's responsibility under the Public Service Employment Act, which is exactly the act upon which Treasury Board has sent out 19,000 letters of notice. This is not a little thing. This is absolutely not acceptable.
The Government of Canada is in the service industry and its most important component is the people. You are saying to us that you want to repeal reporting on the human resources issues within your responsibility. Are you also responsible to Parliament for all the other government departments?
The Chair: The decision to make these amendments was not Treasury Board's so we should not chastise them. They have explained —
Senator Ringuette: No, I know. However, in regard to Treasury Board, chair, a few weeks ago someone from Treasury Board was in front of us. They could not even answer questions that were under their responsibility, which they do not even answer to Parliament to in relation to staffing through agencies.
You have no answer to that. You are not the policy-maker. I understand that. Hopefully the policy-maker will come before this committee in relation to these issues. However, that being said, I would like for you to put forth the answer to these following questions to the clerk of our committee:
How many employees in your department, never mind the government for which you are responsible, by province and by classification, got a notice letter of layoff? How many EXs? How many DMs? How many staffers in your department are not under the Public Service Employment Act and under what classification? What is the cost in your department for program management, i.e. what is the total salary, expenses and bonuses, et cetera, for the management level of your department and programs?
The Chair: Thank you. I have three senators: Senator Callbeck, Senator McCoy and Senator Buth. Our time is out, but I would like to get your questions on the record. If they are long and complicated we will ask for a written reply.
Senator Callbeck: I want to be clear on the reporting of Crown corporations. It says here now that president of Treasury Board must table a parliamentary consolidated report on activities of all parent Crown corporations with the fiscal year that ends July 31. Do all Crown corporations end July 31? Are we just talking about certain ones here then?
Mr. Wise: Correct.
Senator Callbeck: Which ones are those?
Christiane Allard, Advisor, Strategic Policy, Priorities and Planning, Treasury Board Secretariat: We have a detailed list.
The Chair: Could you make that available to us?
Ms. Allard: Yes, we can send it. There are over 100.
Senator Callbeck: It used to be that if they ended by July 31 there had to be a report by the end of December of that year. Now that is changed and it is saying that the president of Treasury Board should act as soon as feasible. That is leaving it pretty open. That could be two years down the road.
Ms. Allard: The intent of changing this section was because of that date that was in the FAA of July 31. That provided a bit of an arbitrary deadline and, because of this issue that we explained of all the Crown corporations having different financial years, by the time the reports were prepared, of course, Treasury Board receives the information from the Crown corporations and there is a certain production time. That production time can be two months or so to actually get the report ready to table in Parliament. By the time the information was being tabled it was sometimes up to 18 months out of date. The solution to this issue was to remove the date and instead of consolidating this information on an annual basis, given that the Crown corporations already had a legislative requirement to report on a quarterly basis, the idea here is to consolidate those quarterly reports and make those quarterly reports available as soon as possible.
They will be made available on a timelier basis, there is that flexibility there, but it is recognizing that the Treasury Board is looking at new ways of collecting data. In the future it is very possible that the information will be consolidated much quicker, given advances in technology.
As it stands, we still receive this information in the traditional paper sense and we then do the roll-up that way. It is just to give that flexibility to the president.
Senator Callbeck: Does this —
The Chair: Senator Callbeck, we are over time. Could you just get your questions on the record, please?
Senator Callbeck: Does this only refer to Crown corporations whose fiscal year ends July 31?
Ms. Allard: No. It applies to all Crown corporations.
Senator Callbeck: That is the way I was reading it and I could not understand that.
Ms. Allard: No, the July 31 was an arbitrary date.
Senator Callbeck: All right; that is fine.
Senator Buth: Further to section 28 of the Public Service Employment Act, you say that this deletes the annual HR reporting. What kind of reporting are they continuing to do?
Mr. Wise: I would have to get back to you on that I am afraid.
Senator Buth: Okay. I believe that goes back to Senator Ringuette's questions that I suspect there still be reporting that will be done and we would like some clarification on that.
The Chair: Could you give us a complete list of other ways that Parliament can be informed of activities? We know what was in the reports that are being eliminated and it was a pretty extensive list.
Mr. Wise: Certainly, and I would just like to clarify as well, especially with reference to the honourable senator's question around the PSEA, the financial administration and the repeal of this HR. We do take our responsibilities seriously with the provision of information to Parliament. Again, this is really just recognition. There is no information being withheld. It is really recognition that information is available much more accessibly and in a much timelier fashion through other vehicles. I named three that are good examples: Again, there is the Public Service Management Dashboard, which is a relatively innovative way that brings together a lot of information and is instantly accessible. It seemed to be a preferable way of getting information both to parliamentarians and to Canadians in a way that really supersedes the annual reporting process, which seems to be quite cumbersome, quite resource intensive and ultimately provides information that is quite stale and out of date by the time it is tabled.
Again, it is not so much that any information is being withheld and there is no reporting information that is being withheld, but it is finding new and more innovative ways to present that information.
The Chair: Could you do a schedule for us showing the information that is being eliminated and where is the other source of that information? That would be helpful to us.
Senator McCoy: I believe this act was actually first proposed by Senator Banks, a former colleague of ours, and it was to encourage the federal government to move in a sustainable fashion towards its whole fleet by upgrading the nature of its vehicles.
If it is true that 75 per cent of all new vehicles built were to be purchased with alternative fuels, I do not think they ever got closer than 54 per cent of new vehicles. The same excuses are given year after year, not that they are credible, either.
I will try to boil this down to two questions. I know you are not directly responsible, I do not think, for the administration of this piece, but one, could you find out whether there have been conversations about an intent to modernize this statute so as to include provision for electric vehicles and/or hybrid vehicles, which would be far more pragmatic, doable and feasible in terms of the act?
Two, would you please indicate alternate ways we could find out how the performance under the statute is being achieved? It is essentially the same question the chair asked. Of course, as always, if you would provide the information through the clerk of the committee, we would be most grateful. Thank you.
The Chair: You understand our concern is we do not want to be voting for something that results in Parliament not being as informed as we have been in the past as to activities. We are supposed to provide some oversight. You might say you can get the information other ways, but if it is not as convenient or brought together, then that causes us more difficulty with all the paper we have and the lack of time.
Senator McCoy: We do not want a trend starting that because they failed to meet their targets, they stop reporting. That would be a shameful day.
Senator Ringuette: I have an add-on to this questioning. Documents and reports that are to be tabled in Parliament are also subject to a parliamentary process wherein if they are not reviewed by committees within a certain time frame, they are deemed to be accepted. Now, if those reports are not tabled, how can they be accepted by Parliament?
The Chair: We look forward to hearing from you. We have given you a bit of work to do, but it will be very helpful for us in understanding this.
Colleagues, our time is over for today. We will be meeting Tuesday morning at 9:30 with respect to Division 6. We will be starting with representatives of HRSDC. This meeting is now concluded.
(The committee adjourned.)