Government Operations Committee on Feb. 25th, 2014

[Bill Matthews]

In this case, this is not a cut, this is actually an increase. The Canada-Quebec Accord on immigration is an agreement reached between the Government of Canada and the Province of Quebec. It relates to funding for immigration. What happens is that there is a base amount in the budget for Citizenship and Immigration but it gets updated every year. There is a formula to calculate an increase and it's based on the number of non-francophone immigrants as well as the total federal government spending. That amount is actually used to provide additional resources. This is actually an increase that's flowing out as a result of the adjustment to that formula.

To finish the response, base funding around that agreement is roughly $285 million, and then this escalator or increasing factor is a formula-based adjustment of $35.5 million over and above that.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Mr. Matthews and Ms. Day.

I know give the floor to Mr. Adler.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair.

First of all, I want to ask more of a macro question just to kick things off.

Mr. Matthews, I will direct it to you.

The appropriations seem to be down for the third year in a row now. It's about $4 billion from last year roughly. Can you briefly speak to account for that, the decrease in the amount of the appropriation?

[Bill Matthews]

Sure. Thank you for the question.

If you go back in recent history over the last three years voted is going down. If you went back to 2011-12, voted spending was $99.9 million, down to $98.6 million in 2012-13, and down to $94.8 million in 2013-14. There are really two main reasons for that. You had the unwinding of economic action plan spending—there was a period where spending was at its peak—and you had initiatives such as strategic reviews followed up by the strategic and operating review, which were aimed at finding further efficiencies. That's sort of bearing out in the reduction in voted items here.

[Mark Adler, Conservative, York Centre, ON]

So the exercise at finding greater efficiencies would, in your estimation, have been a successful exercise, from what the numbers are showing.

[Bill Matthews]

In terms of getting spending back down, absolutely. The deficit reduction action plan or strategic and operating review had a specific target in mind. That target was met, and funding to departments was reduced over a three-year period to allow them time to implement those changes. That's what's bearing out here.

[Mark Adler, Conservative, York Centre, ON]

Thank you.

In terms of these statutory forecasts, I'm seeing here that under Finance, the slide states, “Incentive for provinces to eliminate taxes on capital $92.3 million”. Can you speak about that a bit and elaborate on that for me?

[Bill Matthews]

Sure. That was a budget 2007 commitment made by the federal government, so it does date back. For the provinces that were willing to eliminate taxes on capital, there was effectively money being transferred from the federal government to compensate them for eliminating those taxes.

In this case you have three provinces, Manitoba, B.C., and Ontario. The reduction here is not because they have eliminated capital tax for the first time. It's a bit like that Canada-Quebec accord I mentioned, where there are adjustments to the formula based on actual taxes. That's what you're seeing here, adjustments to the formula.

[Mark Adler, Conservative, York Centre, ON]

Of those three provinces, which one was the biggest recipient?

[Bill Matthews]

I'm not sure I have that with me. I'll have to get back to you with that one.

[Mark Adler, Conservative, York Centre, ON]

Okay.

I notice also that the public debt is down. Maybe I'm missing it here, but roughly how much are we paying down in public debt per year?

[Bill Matthews]

The actual interest costs are going down over what was forecast. That's because long-term interest rates were effectively lower than was forecast. Whenever we do supplementary estimates, we update the forecasted interest spending based on the Department of Finance's most recent numbers, which come from a survey of private sector economists.

Just taking a quick look at my balance sheet here, at March 31, 2013, the total liabilities of the government actually increased over the previous year. This is not because the debt has gone down; this is because interest rates have gone down.

Debt was up in 2013 over 2012. The government is still in a deficit position. Until you see government in a surplus position, you'll see debt basically continue to grow at that level.

[Mark Adler, Conservative, York Centre, ON]

Okay.

In terms of the interest payments, is it a long-term interest rate that's selected, or short-term, or an overnight rate? What interest rate is—

[Bill Matthews]

The actual forecast is based on multiple sets of interest rates, but the bulk of our debt is long term in nature. Finance has been adjusting their strategy over the years to take advantage of better rates.

If it's an area of interest for you, there's an excellent report on the Department of Finance's website on their borrowing strategy and their mix of debt.

[Mark Adler, Conservative, York Centre, ON]

Okay. Thank you.

I'm good, Mr. Chair.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you Mr. Adler, your time is up.

Mr. Byrne, you have the floor. You also have five minutes.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thanks very much, Mr. Chair.

Thank you to our witnesses.

One of the most difficult tasks for us on the committee and as parliamentarians is to analyze horizontal items. They tend to be a little bit more difficult to track.

Mr. Matthews, in slide 7 of your presentation, you informed the committee that Public Works and Government Services Canada and Treasury Board Secretariat were seeking authorization for funding to modernize disability and sick leave management in the federal public service. You list the amount requested as $2.6 million. That's what you've informed the committee.

I've gone back to the supplementary estimates, and I'm trying to square that circle. In the supplementary estimates it tells us that under Treasury Board Secretariat, for funding the modernized disability and sick leave management in the federal public service, vote 1c will seek authorization to increase it to $1.9 million, and available authorities will reduce that amount required by $479,000.

Then, if you look at Public Works and Government Services, under votes 1c and 5c you're seeking $464,000 in new appropriation.

That doesn't total $2.6 million. In fact, if you include the available authorities of $479,000 and you subtract it from the $1.9-million figure under the Treasury Board Secretariat—which, I think on slide 10, you round out to suggest that it's $1.4 million in total—how did you come to the $2.6-million figure when the supplementary estimates don't seem to add up to that?

[Bill Matthews]

Christine, did you want to take that one?

[Christine Walker]

It's a good question. If you actually go to page 2-51, which is the Treasury Board as a department, where it lists all of what is in the supplementary estimates, under “Budgetary”, “Voted”, “1c Program expenditures”, what you'll see there is $1.4 million. That is the $1.9 million for the program to modernize the disability and sick leave management, less a transfer to Shared Services Canada for the workplace technology devices of about $0.5 million. Then down below under “Total Statutory” you're going to see roughly $152,000. That's for employee benefit plans, because in the amount of the Treasury Board of $1.9 million, there is an amount that is for salaries, and on top of those salaries, there is roughly $152,000 worth of employee benefits like the employment insurance plan, Canada pension plan. So that was rounded up to about $200,000, to $0.2 million, which is why you get the difference in the two.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Explain to me, then, why that figure would be included. In information to Parliament, why would you be including $152,000 for employment costs related to funding to modernize disability and sick leave management in the federal public service. It seems to me you have to have some sort of ESP to be able to put this all together.

[Christine Walker]

Bill can add to this if he wishes.

First of all, out of the $1.9 million for the Treasury Board Secretariat, $800,000 is to pay salaries. Just like in any business, there is an employer contribution for salaries for things like the Canada pension plan, employment insurance, those types of things. Those are statutory payments because they have to be paid, and that $152,000 or $0.2 million difference is actually for the employer portion of the employee benefit plan.

The purpose, really, of the $2.6 million is to show you the total cost, including the employee benefit plans.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

That's for the Treasury Board Secretariat. What about Public Works and Government Services? I assume that the same circumstances would apply there as well.

[Bill Matthews]

To the extent they have new employee costs in that money, the same thing would apply. But maybe, since we're always looking for ways to improve estimates, if your message to us, Mr. Chair, is that the horizontal descriptions we have in the upfront piece of the estimates would be better if we split between statutory and voted, we're happy to take that one under advisement as an improvement, if it would be clearer for members.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you Mr. Byrne. Your time is up.

I now yield the floor to Mr. Aspin, who has five minutes.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Thank you, Mr. Chair.

Welcome, Mr. Matthews and your team. You continue to amaze me with the amount of knowledge you have of these figures and how you can put them into context.

I'm going to focus on the Treasury Board Secretariat. You have an item under “Compensation Adjustments” of $73.3 million. I believe you indicated to us in your presentation that there were nine agreements. For compensation adjustments in relation to agreements signed between August 1 and December 1, 2013, this funding will be used to compensate departments, agencies, and appropriations-dependent corporations for the impact of collective bargaining agreements and other related adjustments to terms and conditions of employment. So that's our understanding of what's in that amount.

I wonder if you could tell us, sir, what terms and conditions of employment have changed to require all these adjustments.