Government Operations Committee on Nov. 20th, 2012

[The Chair, NDP, Pat Martin]

I call the meeting to order.

Good morning, ladies and gentlemen, and welcome, everyone, to the 63rd meeting of the Standing Committee on Government Operations and Estimates. We're convened today to examine the very same thing, the supplementary estimates (B).

We have witnesses today who are no strangers to this committee and are always very welcome.

We have Mr. Alister Smith, the associate secretary from the Treasury Board Secretariat; Mr. Bill Matthews, a regular and frequent guest, who is the assistant secretary, expenditure management sector; Ms. Sally Thornton, the executive director, expenditure operations and estimates; and Christine Walker, assistant secretary and chief financial officer of corporate services.

I understand there will be some opening remarks, and then we'll open it to questions from the committee members.

Mr. Smith, will that be you?

[Alister Smith, Associate Secretary, Treasury Board Secretariat]

Yes, please.

[The Chair, NDP, Pat Martin]

Very good.

The floor is yours, sir.

[Alister Smith]

Thank you, Mr. Chair.

I'm pleased to be here to discuss the supplementary estimates (B) for 2012–13 for the government and for the Treasury Board Secretariat.

With me today from the secretariat are Bill Matthews, Assistant Secretary, Expenditure Management, Sally Thornton, Executive Director, Expenditure Management and Christine Walker, Assistant Secretary, Corporate Services.

We are here to respond to your questions on these supplementary estimates. I would first like to focus on the highlights of the supplementary estimates (B) for the government as a whole.

These supplementary estimates, which inform Parliament about the government's spending requirements, are the smallest supplementary estimates (B) of the past three years.

The 2012–13 supplementary estimates (B) provide information in support of the government's request for Parliament to approve $2.5 billion in spending for 63 organizations. This amount includes planned expenditures for which spending authority has not yet been sought from Parliament.

The supplementary estimates (B) include a number of measures from Budget 2012. For example, there is $162 million to continue to support the implementation of the first nations water and waste water action plan; $91.4 million for the industrial research assistance program, which supports research and development by small and medium-sized firms; and $75 million for the community infrastructure improvement fund.

The major items in these estimates include $242 million for the RCMP. This funding relates to new agreements with eight provinces, three territories, and approximately 150 municipalities. These agreements came into force in April 2012. These services are offered on a cost recovery basis for periods of up to 20 years.

There is $226 million for the Department of Health to provide supplementary health benefits under the non-insured health benefits program for eligible first nations and Inuit. This funding is to cover costs for existing clients of the non-insured health benefits program as well as the addition of new clients.

There is $206 million for the Department of National Defence to help comply with the Federal Court decision regarding the Canadian Forces service income security plan long-term disability benefits—the Manuge class action lawsuit, in short.

There is $184 million for Agriculture and Agri-food Canada for costs related to the transition of the Canadian Wheat Board to a voluntary grain marketing organization.

There is $181 million for Health Canada and Aboriginal Affairs and Northern Development Canada for mental health and emotional support services, and for the continued implementation of the Indian Residential Schools Settlement Agreement.

While changes in statutory forecasts are not included in appropriation bills, these estimates do provide information on major changes to statutory items. Key items from the Department of Finance include $733 million for payments to the Province of Quebec for the harmonization of the Quebec sales tax with the goods and services tax, $680 million for additional fiscal equalization payments to prevent declines in major transfers to provinces, and a $1.2 billion decrease in forecast interest on unmatured debt. Unmatured debt comprises outstanding bonds, treasury bills, and other debt instruments.

These supplementary estimates (B) reflect reductions of approximately $483 million from the review of spending in 40 organizations reported in Budget 2012. Where appropriate, departmental funding requests have been offset by these savings, reducing the overall size of the appropriations requested.

I will now turn to TBS-specific supplementary estimates (B).

Let me also comment on the supplementary estimates (B) for the Treasury Board Secretariat.

The department is seeking authority for $81.6 million through these estimates.

This is the result of an increase of $83.1 million requested for vote 15, the central vote for compensation adjustments, and a decrease of $1.5 million to vote 1, which is Treasury Board Secretariat's own departmental program expenditures.

Vote 15, compensation adjustments, is a government-wide vote that supplements the appropriations of departments and agencies for certain employee allowances that are time-limited in nature.

The amount of $83.1 million relates principally to payments to support recruitment and retention for the architecture, engineering, and health sciences groups that have been in place for a number of years. These funds will be transferred to departments and agencies on the approval of supply.

The decrease of $1.5 million in departmental program expenditures is largely due to some offsetting factors: an increase of $1.9 million resulting from the reprofiling of human resources modernization funding, an increase of $0.6 million resulting from a transfer to the Treasury Board Secretariat from four regional development agencies for the provision of internal audit services by the Office of the Comptroller General, an increase of $14,000 resulting from the transfer to the Treasury Board Secretariat from the Public Service Commission for the national managers' community, a decrease of $2.1 million resulting from a transfer from the Treasury Board Secretariat to the Privy Council Office for the Regulatory Cooperation Council, and a decrease of $1.9 million related to the savings from the review of spending, which is used to offset the reprofile of human resources modernization funding.

In total, the items presented in the supplementary estimates (B) represent an increase to the Treasury Board Secretariat authorities totalling $81.6 million, which is appreciably lower than originally anticipated.

Mr. Chair, this concludes my preliminary remarks.

My colleagues and I would now be pleased to address any questions the committee may have on these estimates.

[The Chair, NDP, Pat Martin]

Thank you very much, Mr. Smith. I'm sure the committee members do have a great deal of questions.

First in line for the official opposition, the NDP, is Linda Duncan.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Chair.

Thank you very much for attending today.

We've carefully gone through the supplementary estimates (B) in comparison with the main estimates, and I have a couple of questions to ask.

I will admit that I'm a neophyte to this. Given the minimal information provided for us in the supplementary estimates, I was delving down and asking many questions before I came here to try to figure out exactly what money is being spent for what.

It is of course our responsibility constitutionally, as members of Parliament, to scrutinize spending. One of the big issues before Parliament right now is the cuts to the civil service, the decision of the government to achieve cutting the deficit by cutting 19,000 civil servants. The minister has announced, previously in the media and now in the House, that he has reached a little bit more than half that target. Our job is to try to scrutinize and match up how we're supposedly going to have savings through cutting civil servants, and in cutting civil servants, exactly what savings have been achieved.

My question to you would be this. We see no change in vote 30a and we do see an $83 million change in...is it vote 20? It's $83 million.

Given that you have targeted these amounts and given that the minister has stated publicly that he's met half of his target, can you provide us today with the details of the removal of the staff from the government and the details of which of the three options they've opted for? There are obviously different cash figures based on which one they opt for, and they appear at a different point in time.

I know that the PBO and the union have experienced our same frustration in trying to actually match up the forecast cuts with the dollar figure in exactly when they're occurring, so my question is this: as there are no changes in the supplementary estimates (B) on this major figure, are we to assume, as members of Parliament, that this represents all 19,000 cuts in the civil service? Does it only represent some of them? Do we know if all the cuts are going to be made by the end of this fiscal year?

[Alister Smith]

Thank you very much. I'll start and then I'll turn to my colleague Mr. Matthews.

The reductions in funding are taken over time in the reference levels of departments. They will show up in departmental funds over the three-year period.

When we come in for supplementary estimates, we are looking at requests for new funding for new budget initiatives, for example, some of which may be offset by fiscal reductions in the short run. We can talk about those offsets very shortly.

The job numbers that have been announced are consistent with the financial reductions over time, but it's a three-year program. What these current job figures show is that we're well on track—and perhaps a little bit ahead—in making the reductions in positions that were anticipated in Budget 2012.

I'll turn to my colleague Mr. Matthews for further detail.

[Bill Matthews, Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat]

Thank you, Chair.

To build on that, Mr. Smith mentioned that it is a three-year profile. In the way this profile ramps up over time in terms of savings, the ultimate savings are $5.2 billion. Budget 2012 forecast $1.5 billion in the current year, $3.1 billion in the second, up to $5.1 billion in the third, and $5.2 billion ongoing. That's the buildup. It is a three-year period.

In supplementary estimates (B), we come to Parliament with an appropriation act when we need to increase what departments are going to spend. It's an “up to” amount; we don't come to Parliament to reduce an appropriation amount. When you think about why you're not seeing some of these reductions in the supplementary estimates (B), it's that we only come here if there's an increase.

The member mentioned two votes in particular. The reason we're coming for one of those votes is that we have terminable allowances, which are allowances paid to employees for things such as recruitment and retention that are being transferred into departmental reference levels.

It's an unfortunate name, “terminable allowances”. It has nothing to do with termination. It's actually a supplement to encourage retention and recruitment in job categories in which we have some issues.

That's why we're here and why you're seeing an increase in that number. It has nothing to do with the actual reductions that were spoken about in the House.

One final point is that you asked a question about the various categories of employees who had been affected by the reductions. There are three categories, as the member mentioned.

I'm going from memory, but of the roughly 2,200 people who have been impacted and have taken those options, my recollection is that 1,500 have gone for transitional support or education allowance; the other 700 have elected to wait for the year and be on surplus status.

That's the rough breakdown of what we've seen so far. These numbers will be updated as we go through this process. It is a three-year process.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I'm still not getting the answer to my question. We hear the President of the Treasury Board say that we're on track, that we've cut half. We have numbers allocated here. There are presumably numbers allocated under the specific department.

How is Treasury Board tracking? The President of the Treasury Board stood up and said “we're on track”. Can we be provided the figures, the details of the positions that are being cut, so that we can actually verify that the dollar amounts match up with the positions that are being cut or “voluntarily leaving the government”?

[Bill Matthews]

Again, supplementary estimates are not the best vehicle to do that.

The way I would go about doing it is there was some information released that showed the 19,200 broken down by portfolio ministry. You'll be aware that each department has to produce quarterly financial reports. The first quarter is already out; the second quarter is due at the end of this month. If you were to track those numbers against spending in the departmental quarterly financial reports, that gives your best correlation, because what you're curious about is actual spending.

[The Chair, NDP, Pat Martin]

Ms. Duncan, you're over time. I'll have to interrupt you there.

Mr. Matthews, thank you very much.

For the Conservatives, we have Jacques Gourde.

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

Thank you, Mr. Chair.

My thanks to the witnesses for joining us this morning.

On page 15 of the supplementary estimates, there is a Treasury Board request with regard to vote 15. It mentions compensation adjustments. I am sure that there could easily be confusion on that. One might think that it has to do with the measures in Budget 2012.

Could you please explain what this vote really is and what the amounts for adjustments will be used for?

[Bill Matthews]

That is a specific vote that we use to resource departments for certain types of compensation expenses. If you think about the base salary of an employee, it is in a department's reference level already. We have these special allowances, which we manage centrally, and we transfer those funds to departments as needed, based on those allowances.

The money that is being requested in this vote relates to a couple of terminable allowances or “recruitment and retention” types of allowances that are based on some agreements that were negotiated. Specifically they are for the architecture and engineering group, which has about 3,600 members. The other major component is the health services group, which has about another 2,300 members and includes doctors and nurses. In addition to their base salary, they receive some additional funds to basically allow for recruitment and retention.

That's what this vote is all about: to get those funds into departmental reference levels for those types of things.

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

Vote 1 for the Treasury Board Secretariat shows a transfer. Could you please tell us to whom that money has been transferred and how it will be used?

[Bill Matthews]

I'm sorry, Mr. Chair. Could I get clarification of which transfer?

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

Vote 1 for the Treasury Board Secretariat shows a transfer.

[Bill Matthews]

That's vote 30. Thank you.

[Alister Smith]

Is it transferred under vote 1? I think that's what you may be referring to.

[Bill Matthews]

It's vote 1.

[Alister Smith]

The transfer of the Regulatory Cooperation Council back to....

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

Vote 1.

[Christine Walker, Assistant Secretary and Chief Financial Officer, Corporate Services, Treasury Board Secretariat]

Are you referring to the transfer of $2.1 million from the Treasury Board Secretariat to PCO for the Regulatory Cooperation Council?

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

Yes.

[Christine Walker]

Okay.

The Regulatory Cooperation Council was established by the Prime Minister in February of 2011. Originally it was placed in the Treasury Board, because of the strong alignment between the Regulatory Cooperation Council and the Red Tape Reduction Commission, which was housed in the Treasury Board.

Around March 31, 2012, the Red Tape Reduction Commission finished and wrapped up. Subsequently, in July, the Prime Minister announced that the Regulatory Cooperation Council would transfer from the Treasury Board to PCO. The total original amount of the budget for the RCC was $4 million, so the balance of $2.1 million will be spent under PCO.

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

For the advertising costs on page 22, there is an overview of the allocations for supplementary estimates (A) and (B). The figures do not correspond exactly to those in the quarterly reports and in other reports. Can you please tell us why?