Government Operations Committee on April 2nd, 2009

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

I would like clarification on a point you raised. In fact, the chair was about to do the same.

I will take two very concrete examples. Fisheries and Oceans is on the list under chapter 3, and will receive, over two years, some $270 million to repair its infrastructure. If this department says that it wants to immediately spend $35 million of the $3 billion, it must go before cabinet, and if the request is accepted, Treasury Board will allocate the amount requested.

I will give you another example. The Department of Human Resources and Skills Development is considering extending the five weeks and has calculated how much this measure will cost. Could the department go before cabinet now and say that it needs a given amount? Following that, it is the Treasury Board that will apportion the money.

I am talking about very concrete projects. You said you had to turn to each one of the departments to obtain this type of information. I do not understand. It is Treasury Board that has to authorize all of these funds and it should be able to give you this information.

[Alister Smith]

You've raised a number of questions here, so let me see if I can tackle them. My colleagues may have to help me.

On the Department of Fisheries and Oceans, chapter 3, funding small craft harbours, for instance, I think the question was on what happens to the money if they can't spend it immediately. There may be a couple of elements to the answer to that question. If they've made commitments and the money's not spent in the fiscal year, they can ask for re-profiles. The Department of Finance and Treasury Board would have to agree to those. There may be a question here--and I'll leave it to my colleague--on “use it or lose it”, in terms of the funding.

Your second question was really on the EI extension--the five-week EI funding--and whether HRSDC could ask for additional resources beyond those in the budget. That would require new funding and a different process. One of my colleagues should probably deal with that, because we are still dealing with what's in the budget. Anything over and above that requires policy approval, Treasury Board approval, a source of funds, etc. So there are a number of elements that have to happen. I'll leave that question to my colleagues.

The third point was on why Treasury Board can't provide this information, as opposed to the departments. We see things at the end of the process and approve the funding, so our window is perhaps a little more limited sometimes than other central agencies in what we see. But we have that information when the departments come in and say they can't spend the money and are looking for a re-profile, or they need more money. We only see part of the story. The three central agencies work together and collectively see more of the story as it evolves.

Perhaps my colleagues can address the second question.

[Tim Sargent]

On PCO's role in this, before you go to Treasury Board to spend money you need policy authority, as you all know. That usually involves taking a memorandum to cabinet. The new measures in the budget have typically gone to cabinet to get policy approval. We have been speeding that process up, and in the report we said we expected to have almost all of that done by the end of last month.

At that point we have policy authority. They need funding authority as well, but the budget provides that. Then we essentially hand that over to Treasury Board and the Treasury Board approval process starts. From our perspective at PCO, we're very much involved at the front end of that.

Chris, I don't know if you want to add anything.

[Chris Forbes]

I think the one question that came up in Mr. Smith's remarks was about what happens if they can't spend the money. We revisit that at the end of the fiscal year in the action plan. We're focused right now on doing what we can to get the money flowing. On what will happen six or nine months from now, we're certainly working to make sure the money can be spent and the projects can get going.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you.

[The Chair, Liberal, Derek Lee]

Thank you.

Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Mr. Chairman.

I'll use my time to sort of summarize maybe what we're feeling on this side, and maybe that explains some of the trains of questioning.

We have this unprecedented situation in which we're actually trying to spend lots of money fast. In the 12 years I've been here, that's completely unprecedented. I was elected in the middle of 1997 when it was all cutbacks and trying to stop spending at all costs. This is completely uncharted territory for a lot of us, and now we have billions of dollars flying out the door with what seems to me to be the flimsiest of scrutiny. It's almost the polar opposite of what we've been taught, in any kind of disciplined way, about oversight.

Rob was speaking in very colourful language. He and I were elected about the same time and went through this. We cut our teeth on cutbacks, really, and tightening the belt, not figuring out a way to have more money flow. And when he was in opposition, he was an outspoken critic of what could be seen as partisan spending.

So here we are, months away from a federal election, and I'm haunted by this image of John Baird in a bunny costume, gallivanting across the country with a goody basket, showering swing ridings with the Conservative government's great largesse, and here we are, the very few MPs on the opposition benches charged with the responsibility of making sure that doesn't happen. And I still don't see the tools to prevent it.

[Rob Anders, Conservative, Calgary West, AB]

I say we cut some of your budget.

[Pat Martin, NDP, Winnipeg Centre, MB]

Well, there would be no bunny costume. That shouldn't be funded. Certainly it shouldn't be an expense write-off.

But the source of my frustration is that they didn't need this special vote 35 to get stimulus infrastructure money going. All they had to do was lighten up on the Building Canada rules, because the provinces couldn't match, so the money didn't get spent. That spending was pre-approved properly by Parliament and with a great deal of optimism, frankly, that it would roll out there across the country, and much-needed infrastructure would in fact get started. But with the matching formula, it was impossible.

What would have been the technical process to change the matching mechanism of the Building Canada fund? Can anybody answer that? Would there have to have been an act of Parliament?

[Alister Smith]

I don't believe that it would require an act of Parliament to do that. I think you would need a change in policy authority to begin with, and then the terms and conditions of the program--

[Pat Martin, NDP, Winnipeg Centre, MB]

How much of that fund is still waiting to be rolled out? The take-up on it wasn't that enthusiastic because the matching requirements couldn't be met. Are there not billions of dollars still sitting in the Building Canada fund for which spending has been pre-approved?

[Chris Forbes]

It's part of that longer-term, seven-year, $33 billion infrastructure plan that was announced in the 2007 budget. Certainly that was intended to go over a number of years, so there certainly are funds for future years that are still out there.

The action plan itself includes not just infrastructure of the type covered under the Building Canada fund, but housing measures, federal infrastructure measures, which have been referred to, and green infrastructure measures. We could go down the long list, but clearly, as I think Alister mentioned, there are a hundred or more items in this budget. So when you're looking at all of those, certainly the idea with the vote 35 was that we were looking for a way to help ensure that in that period between April and June, departments that were ready to spend or programs that were ready to go weren't delayed until June because departments weren't able to cash-manage. So that was the genesis--

[Pat Martin, NDP, Winnipeg Centre, MB]

There were so many projects ready to go under the Building Canada fund that could have gone ahead, were it not for the matched funding.

[Chris Forbes]

I can't speak to that specifically, I must admit.

[Pat Martin, NDP, Winnipeg Centre, MB]

There are many that I know of, and there are billions of dollars in that account. We didn't need to go through all of this special eleven-twelfths unprecedented permission. If we wanted to get infrastructure money rolling out the door quickly, we could have just changed the rules in the Building Canada fund and taken away the matching requirement for provinces. Believe me, they would have come running with plenty of projects, and they'd be under way right now instead of in June. This is the frustration we have and why we're suspicious.

When we were called into that special briefing, all four parties, and asked to give unanimous consent to this notion, we were all very wary, because three-twelfths is the norm. That gives you the bridging necessary and doesn't sacrifice any of the oversight and scrutiny that's been so carefully built into our parliamentary system. Asking for eleven-twelfths up front is a pig in a poke. It's a blank cheque. As I say, the idea of John Baird in a bunny costume, skipping across Canada with a goody basket, spreading the Conservative government's largesse to swing ridings, just turns my stomach.

[The Chair, Liberal, Derek Lee]

Thank you, Mr. Martin.

I have indications from Mr. Gourde, Mr. Szabo, and Ms. Hall Findlay. We have to discuss our future business on this and a couple of related things. I have one question from the researcher. We'll have to be less than five minutes, or we won't get our work done.

Monsieur Gourde.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you very much, Mr. Chair.

I'm going to ask a very simple question in order to understand the mechanism used to transfer this money.

Suppose that funding of a provincial or municipal infrastructure project is based on a sharing formula of one-third, one-third, one-third. The city is ready to go ahead immediately with a project to repair its water and sewer system. If the project costs some $30 million, the federal government will give $10 million to the Province of Quebec, which in turn will redistribute it to the municipality.

How does this all work? Are funds allocated immediately to a province or are they only disbursed at the end of a project?

[Chris Forbes]

I'm not an expert in how the funding in infrastructure agreements works, but I think the normal process would be to agree on a project with the province or the municipality, together with a payment schedule. Progress must be made, but once the agreement is in place and the project starts, the billing will depend on the agreement struck between the province, the municipality, and the federal government. Generally, you'd have some kind of billing process.

[Alister Smith]

For each of these agreements, there are terms and conditions. As Mr. Forbes was saying, these things are set out in the agreement signed by the three parties. This applies to eligibility, cost-sharing, repayment requirements, and whatever is required from each of the three partners. It would vary from one contribution agreement to another.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Each time the amount is disbursed, it is recorded in a registry, in order to prove to the House of Commons that the given project was given money, and according to which criteria. The same transparent process is used for all programs.

[Alister Smith]

You're talking about detailed information on any particular program at that project level. I think we'd have to refer to the department, because there could be a great number of projects under any one of those contribution agreements. Normally the departments report this.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Fine. Thank you.

[The Chair, Liberal, Derek Lee]

Thank you, Mr. Gourde.

Ms. Hall Findlay.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I would just like a clarification on lapsing, and I'm not talking about money in the $3 billion. I think we all understand that this will continue, because it's budgeted money anyway, notwithstanding the concern about it not being spent.

This is a question about the money that was in this past budget that has not been spent and that has now lapsed. I have two questions. Can you just confirm what that amount is? And can you just confirm that to be re-profiled, it's not automatic? It would have to have, I think I heard, agreement from both Treasury Board and the finance department.

[Chris Forbes]

First of all, for the fiscal year that ended March 31, we won't have the final lapse information for you at this stage. It's too early, obviously. However, in general, when a department is lapsing funding, and they think they're going to lapse on a program, they will come to us and ask about the possibility of re-profiling and including an amount in the next year's estimates somewhere, either in the mains or in the supplementary estimates.

In a case like infrastructure, when often there are long-term commitments—I've signed a contract, for example, with a certain province on a certain project, and it happens that the bill hasn't come in March but is going to come in May--in general, those kinds of re-profiles are automatic. There's no question asked about that, since a department has committed the money and something is under way and there's just, literally, a timing issue. This happens a lot on capital projects, right? There's timing as to how quickly they get under way. When milestones are met, those re-profiles are basically done.