Government Operations Committee on April 19th, 2010

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

Mr. Martin for eight minutes.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Madam Chair.

Welcome, witnesses. Thank you for being here.

I'd like to continue somewhat in the vein that I think my colleague Mr. McKay from the Liberals was going. The purpose of our exercise today is to study the impact of this freeze on departmental budgets such as yours, and to try to gauge the impact on your ability to carry out your mandate. In your case, your mandate is very special in terms of elevating the standard of living for people overseas and eliminating poverty, etc.

I can't see how the cuts outlined in your report and in our research are possible without a real and dramatic impact in your ability to do that laudable work.

Let me start with questioning something from your own piece you introduced today, Mr. Moloney. You tell us you have approximately 1,950 employees in total, and roughly 170 of them are posted abroad in 49 countries. I was at first quite surprised to learn there are only 170, as I've travelled extensively and met an awful lot of them. It seems like they're all over the place. So I'm a little disappointed, frankly, to learn there are only 170.

The question I have, in the interests of belt tightening and reducing your budget...it must cost a lot more to keep somebody in the field than it costs to keep them living in Kanata and working in downtown Ottawa. Is there a contemplated reduction in the people you support in the field?

[David Moloney]

No, there isn't. To the contrary, the government has been clear that....c'est Gatineau, pas Ottawa. The government has judged, and certainly other organizations have suggested to us, including the OECD, which looks at aid effectiveness on behalf of all of the donors.... There is a strongly shared judgment that while there are costs—and I'll come back to that—aid effectiveness is certainly benefited by having more staff in the field. Why? It is so we can truly understand the circumstances, so that we can--

[Pat Martin, NDP, Winnipeg Centre, MB]

The experience doesn't really bear that out, though, Mr. Moloney, with all due respect. Out of 1,950 employees, you have only 170 of them in the field. I'm not being critical of your organization, but I can't imagine. For an aid organization, it seems like a disproportionate number of them are taking the bus to work in Ottawa or Gatineau instead of.... Anyway, I have to move on as time is limited.

It strikes me, in listening to this presentation, that there is a contradiction I'd like to ask your view on. We're borrowing money to give $15 billion worth of tax cuts to the most profitable corporations in the country at the same time as we are cutting and hacking and slashing the budget for CIDA to alleviate world poverty. I don't think anybody argues that it was the unbridled greed and the wretched excess of the corporate community that caused the economic downfall, that caused all the stimulus spending, and that has now caused all the cutbacks. Yet we are borrowing money, $15 billion, to reward that bad behaviour, in terms of giving further tax cuts.

Do you share my criticism of this seeming contradiction, this pretzel logic?

[David Moloney]

The one part of that I would speak to is simply to say that I do not share the view that CIDA's budget is being slashed. The international assistance envelope is being capped. It is growing this year. It will not grow for the next two years, and our operating budget is remaining whole.

[Pat Martin, NDP, Winnipeg Centre, MB]

But your transfer payments are 92.7% of your total budget, so your aid, which is admirable, is very cost effective. I love to see most of the money going to aid and as little as possible going to administration. But our figures here are the actual spending as audited by the public accounts committee in 2008-09. Transfer payments were $3.169 billion. Projected spending for 2010-11 will be $2.924 billion. That's a significant drop of a couple of hundred million dollars, is it not? Or am I not reading this correctly?

[David Moloney]

You are reading it correctly. What I'd like to point out is that the main estimates are an initial proposal to Parliament. Last year, for example, between the main estimates and the additional supplementary estimates (A), (B), and (C), CIDA received from Parliament an additional $500 million. So if one looks at main estimates this year compared to main estimates last year, there is actually an increase. And last year's main estimates were larger than the year before.

[Pat Martin, NDP, Winnipeg Centre, MB]

That's very helpful. Thank you.

Getting down to the smaller portion of your budget, which is your total operating expenses, you are contemplating a drop in the total cost of your operating budget from $414 million in 2008-09 to $229 million in 2010-11. Are you trying to make that up in that same $500 million extra transfer in the supplementary estimates, or do you somehow have to tighten your belt and find $184 million to cut out of your operating budget?

[David Moloney]

The answer is no. Again, that was an amount that was an accounting amount after the fact. The $160 million of that apparent decline reflects an exchange rate revaluation. In fact, our operating budget this year is extremely close to the operating budget of last year. It is within a couple of million dollars.

[Pat Martin, NDP, Winnipeg Centre, MB]

I think I heard you make reference to the exchange rate in answering a previous question. I didn't quite understand that.

Let me ask you a question about personnel, then.

[The Chair, Liberal, Yasmin Ratansi]

This should be your last question, Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

Do you intend to have a hiring freeze as part of your strategy to cope with the budgetary freeze?

[David Moloney]

No, we certainly do not.

CIDA, in fact, currently has a turnover rate of around 10%. That reflects, currently, 3.5% or so of employees who are eligible to retire, although CIDA employees do not retire right away.

[Pat Martin, NDP, Winnipeg Centre, MB]

Do they just keep on working?

[David Moloney]

They love their work.

Even if we are unable to find any efficiencies on the non-salary side, which as I've tried to lay out we're quite confident we can, CIDA certainly needs to hire each year, and we do.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

We'll go to the next round of questions. We'll have Ms. Hall Findlay for five minutes.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you, Madam Chair.

And thank you for being here today.

I understand that using this $163 million for other subsidies and payments was unusual and that therefore the budget from 2008-09 and 2009-10, which we don't have the specific numbers for, and the numbers projected for 2010-11 are actually relatively similar.

I have two comments. First, I am still not at all clear where such an extraordinary amount of money just lumps into being “Other subsidies and payments”. At some point, I would be very interested in having the details on that. That's a big number to just come under “other”. And we're not at all clear that this sort of thing might not happen again. If there is a freeze, there's no guarantee that a freeze wouldn't also have to include unusual circumstances, and other things would actually have to then be cut from an operating budget.

I would also point out that there are a number of departments that have had significant increases over the last two years, so on a relative basis, CIDA has had less than other departments in terms of an ability to do what it does.

I am very proud of the fact that Canada has a history of thoughtful diplomacy and balance such that we have been able to in fact involve ourselves in development in ways that may have been easier or better for us to do because of that general impression we've made internationally. Anybody can write a cheque. And we're awfully proud, as Canadians, that we are very fortunate to be as affluent and as advanced as we are. I'm proud of the fact that we've tried to do something. But it's not just about writing a cheque. I am concerned that these decreases in CIDA's budget over the last two years, and then a freeze, are indicative of a reduction in that Canadian effort.

Having said all that, do you have any analysis, so far, of where you are going to deal with the freeze? When you have inflation, which we expect will increase somewhat, and economic growth, which we know will happen, and population growth, a freeze is not a freeze; it is a cut. You are going to have to cut certain things to address the freeze.

Of those things CIDA does that we feel are important, what are you planning on cutting?

I know you said that we are already engaged in efficiencies. That's all wonderful, but it's not going to actually deal with the numbers we're talking about. I'd also argue that if you've already done it, you have that much less room to actually improve even more.

What's the analysis? Where are you going to end up having to cut?

[David Moloney]

I think there are three or four things I can very quickly respond to.

First of all, on this amount of $163 million in 2008-09 under “other”, I would propose, if the committee likes, that we provide a written explanation. I must detail, however, that this was not a cut; it was a one-time charge added on, for accounting reasons, to our normal O and M budget.

If I could, I'll read two numbers to the committee from the main estimates. Our operating vote 25 this year is proposed at $203,363,000, which is only $305,000 less than the $203.7 million of 2009-10. That number was quite similar the year before, leaving aside this charge. Those are two points.

The third point, and you're quite right, is that we do actually have to find $2.2 million to pay our employees, and we need to find those efficiencies.

The point of my earlier emphasis on our business processes is that we believe we can actually deliver the same or better effectiveness by being more efficient. But yes, absolutely, we will have do with less non-salary expenditure than otherwise, or we will have to replace slightly fewer employees than we would normally replace, given that turnover rate I spoke to.

[The Chair, Liberal, Yasmin Ratansi]

You may ask a very brief question if you have one. If not, we'll proceed to the next one.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I will only point out that keeping the same budget is significantly different from other departments having significant increases.

Thank you.

[The Chair, Liberal, Yasmin Ratansi]

Mr. Nadeau, you have the floor for five minutes.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you, Madam Chair.

Good afternoon, madam.

Good afternoon, gentlemen.

For four years, and again since the budget was tabled, I get the impression that I have been watching a demolition derby with CIDA as the prime target. Here we are with CIDA, whose role, in a sense, is to be a kind of Canadian Mother Teresa—my apologies if my analogy offends anyone—helping third world countries, countries that are experiencing extreme difficulties, to become developing countries, or, at least, to improve the standard of living of their people.

There are cuts of 25% in professional services, for example. No matter which department or agency, their strength lies in the expertise of those who make that expertise available in order to improve the lot of the people. Now we have to cut those professional services, and transportation and communication, which are all essential elements in providing assistance of any kind.

You will tell me that the effect on grants and contributions is minimal. But it is also the heart of the matter. The people who work for this department or that one make up the heart of that department. You can invest large amounts in equipment. But if you do not have the expertise to allow CIDA people to pass their knowledge to people in the field, so that they in turn can pass it on to their own people, you are going to run into serious difficulty.

How can you say, for example, that CIDA people can work at the level that the mandate demands when there are such major cuts?

[David Moloney]

As I mentioned before, we are talking about a cut of 1%. The 1.5% is the increment, the increase, of our salaries, the salary of an average employee—

[Richard Nadeau, Bloc, Gatineau, QC]

Excuse me, Mr. Moloney. You know how things work here, we do not have a lot of time, and such.

There are 25% cuts in professional and special services. You may say that, if you consider the big picture, the reductions are not so big. But, in the contribution made by people, the contribution of human knowledge—I am not talking about artificial intelligence or computers, but human intelligence—the amounts of money in those envelopes is much less. In my opinion, those envelopes make up the very heart of CIDA.