Government Operations Committee on Oct. 30th, 2012

[Douglas Nevison]

Again, I will just make the distinction between main estimates and the budget.

The main estimates, as you said, are department-based. It's spending for the upcoming year to help parliamentarians come up with the parliamentary authorities for that spending.

The budget is perceived as a much higher-level policy document that sets out the government's economic and fiscal vision for a five-year period going forward. In that context, particularly when the global and economic situation is highly uncertain, I think there is a value to having the flexibility to wait until you have the right amount of information to present that plan.

[The Chair, NDP, Pat Martin]

A lot of us believe it's useful to be able to follow the money from budget to estimates to spending to public accounts in that cycle of the very picture that you drew for us to help us understand how that money flows. We'd still like to be able to follow that money, and I don't think we're any further ahead, but that's not my job as chair.

Next is Jean-François Larose.

[Jean-François Larose, NDP, Repentigny, QC]

Thank you, Mr. Chair.

I would also like to thank our guests for being here for the study.

We have listened to your recommendations and we appreciate the fact that your position is to adopt most of the points that concern you. I think that the complexity of the situation justifies our motivation to clarify the whole document.

Measures are being taken now, but I have a bit of trouble understanding why your response to our proposal to have a fixed date is that it is too complicated, when you have agreed to sit down with us to help us fully understand every aspect.

Here is my first question. On the one hand, the government says that it wants to reduce the administrative burden, but it will actually introduce another type of complexity. In fact, two accounting systems will be needed, given the reforms of the pension plans of public service employees that the government is planning to carry out. On the other hand, the government is talking about increasing transparency, but is not able to make a commitment to align the key estimates documents to ensure this transparency because of the duplication of accounting systems.

How do you explain that paradox? It is all very well to advocate a position, but then you have to follow through on it.

[Bill Matthews]

I think that the vast majority of the recommendations made by the committee, Mr. Chair, were accepted. There are two exceptions.

We haven't rejected recommendation 2 around the vote structure. We've said we wanted to put something before the committee to make sure everyone understands what we're talking about and that we understand the costs and timelines before we proceed. That's just a cautious approach, and I think it's the wise thing to do.

The balance of the recommendations were accepted, as I mentioned earlier. The one sticking point we've had is around this notion of fixed budget dates and maybe understanding the roles of the various departments.

The model we have in the current system is that before a spending proposal can appear in estimates, it needs to go through the Treasury Board approval process. That means departments have to have a very sound idea of what they're going to spend—how much is administration, how much is actually going out in grants and contributions, what the program objectives are, and what the performance indicators will be. It's only at that point that departments are authorized to spend money, so it's a significant amount of work after something is in the budget before departments can actually design their plans in detail and get spending.

I think one of the keys to helping this committee understand the linkages is the response to recommendation 7, because we have committed that for all new funding appearing in an estimates document for the first time, there will be a link back to the budget so that committee members and parliamentarians can see which budget the funding came from.

I'm not sure if you want to add anything on the fixed budget, or if we've covered it.

[Douglas Nevison]

I think that sums it up, and that's the key timing issue that I keep referring to, the fact that there is a downstream process after the policy document, the budget, is tabled. There is a downstream process in terms of doing due diligence to make sure that the program is delivered as effectively and efficiently as possible. That's what takes time in terms of bridging between the two.

For example, a budget date in January with a tabling date for main estimates in March is not going to end up with much more new information with respect to new spending in a budget. That's the basic situation.

[Bill Matthews]

I will add one further comment. My colleague mentioned the economic action plan budget. You will recall that there was need for the economic action plan to get spending out the door in a big hurry. There was a special appropriation process put in place that year to basically vote money in advance and get the projects rolling.

That system actually looks a lot like what some of the provinces have. They are able to operate on an integrated basis because they basically go to Parliament with a black box and say, “We're going to set aside this money for this amount and we'll tell you later in detail what actually happened.” That's the trade-off. In the system now, before you actually get money in estimates, you need details on program spending and performance measures. The trade-off is you could put something in estimates earlier without a good understanding of what the money will be spent on. That's the trade-off on our current model.

[Jean-François Larose, NDP, Repentigny, QC]

I would like to go back to recommendation 16 and to your comments. Would it be possible to set up a pilot project for recommendation 16? The details of the budget could be included in the database, if there were still challenges with including those details in the main estimates.

[Bill Matthews]

If the intent is to build a database—and I'm speculating a bit here, Mr. Chair—that has information on estimates and is searchable, and if in the estimates you include data on which budget a funding initiative was included in, that could be part of the database going forward, absolutely. If it's in the estimates, it could be in the database.

[Jean-François Larose, NDP, Repentigny, QC]

Thank you.

[The Chair, NDP, Pat Martin]

Very good. Thank you very much, Jean-François.

Next, for the Conservatives, we have Peter Braid.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you very much, Mr. Chair. Thank you to the officials for being here this morning. I appreciate your input today and earlier as part of our study.

I'll certainly speak for myself. I think all of our recommendations were obviously important. I think that the two most important ones were, first of all, looking at ways to better synchronize the budget with the main estimates. As you can probably sense, there's some disappointment around the table that we weren't able to make progress there. I think we would all urge you to continue to look at ways to somehow better make that link to increase transparency and understandability.

We are making progress on the second important recommendation, and I'm particularly pleased about that. I think it was one of the major themes that we heard through the study, and that was to review estimates by program activity. I want to focus my questions on this particular topic.

As I understand it, much of the information in terms of reviewing by program activity already exists in many respects. I think we heard that through the study. The work involved, the onerousness of this change, involves a change to the vote structure, as I understand it.

Could you just elaborate on that, why that's the complex part of this task, and what will be different in the new world versus today?

[Bill Matthews]

Mr. Chair, the premise is that a lot of the information is out there already. That's absolutely true. Information on programs is included in the estimates for information purposes. It does not get a lot of attention, simply because the vote, which is actually key for spending money, is on capital, operating, and grants and contributions, but the information is out there right now.

To be frank, because it's for information purposes, departments do their best to estimate what they might spend against a given program. When you're into dividing people's salaries across programs, estimates are involved, and that's okay.

When you think about our vote structure, given that it's illegal to overspend your votes, it's a key control we have over departments in terms of managing government spending. They manage their vote structure quite aggressively, because it's against the law to overspend money allocated to a particular vote. All of our controls in our financial systems, at the departmental level, are based on the current structure.

Moving to a program-type vote of some sort would entail changing all the controls in the departmental systems, which would be a big effort, because each department has its own financial system. At the same time, we'd want to make sure that the estimates of what departments think they will spend against a particular program were more rigorous, because Parliament would actually be voting on that money. Right now, departments do their best to actually estimate what they will spend, but it's for information purposes. We'd need to give departments time to make sure they improve the rigour around those estimates.

Second, maybe take a look at their program structure and ask, given that Parliament wants to vote on the structure, whether this still makes sense.

That's more or less where the work would be. The big cost is around the systems cost to actually change our control structure.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Through this change process, I appreciate that systems will need to change, and to some degree, reporting will need to change, but will the process of change provide any opportunities for streamlining or simplification for departments or in the overall program review process?

[Bill Matthews]

It's tough to say. Potentially it would.

If I think about the current information around capital, grants and contributions, and operations, there would still be a need for the government to collect information on proposed capital spending. That's just good planning. There is not a lot that would drop off in terms of the information requirements.

The opportunity for streamlining is really around information technology. Does creating a database actually help departments streamline their systems and streamline our processes, potentially?

I'm not sure if you want to add anything on that, Sally.

[Sally Thornton, Executive Director, Expenditure Operations and Estimates, Expenditure Management Sector, Treasury Board Secretariat]

To your earlier question first, and then back to where Bill left off, you asked what would be different in the new system. I will talk about what would be different for you.

When we come forward with the estimates, instead of having it by portfolio of ministry with this amount for operating and that amount for capital and this amount for grants and contributions, we would, in Fisheries and Oceans, for example, be asking you to approve dollar amounts for safe and secure waters, for economically prosperous maritime sectors and fisheries, etc., using the strategic outcomes and program activity model. Then you could go straight into those departmental reports on plans and priorities and see them drilled down, at a greater level of detail, into the specific program activities, so your approvals would actually be fully aligned with that other information that is more directly linked to program activities and results, as opposed to type of expenditure.

The only streamlining is in that cascading. I'm not sure there would be any savings in this, in that we still need to maintain a good sense of what is being spent in terms of operating, capital, and standard expenditures. We also have a number of issues we'd want to explore with respect to how we would go, but that is fundamentally what would be different for you. You wouldn't be going out saying, “We approved x billion in operating”; you'd be saying, “Wow, we've just approved an investment in safe, secure waters”.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

That's great. That cascading you've described is excellent. We certainly look forward to that new world, and thank you for your efforts in helping to get us there, ultimately.

[The Chair, NDP, Pat Martin]

Thank you, Peter.

It's a brave new world, as it were.

May I ask for just a bit of clarification on Peter's question? In order for that to happen, Sally, one of the recommendations we made would have to have been fulfilled, which is that the reports on plans and priorities be released the same day as the estimates. In 2012, the RPPs came three months later.

How could you follow that lovely image of cascading if, in fact, you waited three months for the reports on plans and priorities?

[Sally Thornton]

First, it will take some time.

Right now the people who prepare the estimates are also the people who prepare the reports on plans and priorities. If the estimates are actually prepared at the strategic outcomes level, they are basically rolled up from the same material that is in the RPPs. If we were to do the cascading, the idea is that we could shorten and shorten the time until ultimately, in my brave new world, what you would see in terms of main estimates is Part I, which is the government overview, a summary of the major changes, and a draft of the bill, and then you'd go straight to the RPPs.

At that point there could be almost no time lag. It might be the same day. However, that is over a period of time and with those systems in play.

[The Chair, NDP, Pat Martin]

Okay, Denis.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you, Mr. Chair.

The response to recommendation 7 says that “the Government agrees to identify, in estimates documents, new programs that are appearing for the first time and the appropriate source of funds from the fiscal framework.”

Am I to infer that, one day, new programs will be included in the main estimates and that we will not have to wait for the supplementary estimates (A) to see them?

[Bill Matthews]

The commitment is that the first time a new program appears, whether in the main estimates or in the supplementary estimates, it would be linked back to the appropriate source of funds, so it wouldn't matter which of the estimates documents it appeared in—the main estimates or supplementary estimates (A), (B), or (C). The commitment would be that the first time new funding appeared for a new program, there would be a link back to the budget or to the appropriate source of funds in the fiscal framework.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you very much.

You refused to provide the Parliamentary Budget Officer with all the requested information. In the House, the minister said that he was going to continue to report through the usual channels.

When you thought about your response to our report, have you considered the possibility that the Parliamentary Budget Officer is a help rather than an obstacle for your organizations? In other words, providing him with the answers that he requests might reduce your organization's efforts to achieve its objectives.

[Bill Matthews]

No. Given that the recommendation related to the Parliamentary Budget Officer was not directed to departments but to the House of Commons, we simply added some context to a previous study. We did not consider the role of the Parliamentary Budget Officer in drafting this response.

[Denis Blanchette, NDP, Louis-Hébert, QC]

To some extent, it is a bit disappointing. The Parliamentary Budget Officer is still part of the equation. If you wanted to think outside the box, it might be a good idea to use an external resource to reduce the internal constraints that you have, when the time comes to make changes. I am a bit surprised by your position. I still encourage you to think about that. Perhaps you might be able to avoid some bumps in the road just by cooperating more with the Parliamentary Budget Officer.

I will now turn specifically to you Mr. Nevison. You are saying that you would like to maintain the current flexibility in the tabling of the budget. Do you think that that must be done at the expense of the information provided to parliamentarians? Let me explain. I am thinking of the reports on plans and priorities, which I feel are valid tools for gauging what is to come. Is there maybe a way to eliminate the supplementary estimates (A), which, in broad terms, present new programs? Also, could the reports on plans and priorities not be provided to us soon after the budget is tabled? And could the supplementary estimates (B) not be replaced by economic statements, for example?

All that would give us this flexibility. Have you thought about that?

[Douglas Nevison]

Making the distinction between the purposes of the two documents is important. The budget is a high-level policy document.

I take your point about the timing. We discussed that. On the question of timing of supplementary estimates (A) and (B), I would turn that over to you, Bill.