Environment Committee on Oct. 31st, 2006

[The Chair, Conservative, Bob Mills]

I'd like to thank our guests for coming. Basically, I understand that you have a very brief presentation, and I emphasize that word. Then we can get to questions from the members.

Go ahead, Mr. Cullen

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Chair, this is just a procedure question. I was looking for some committee consensus to move my motion. Will that be now or after we've done the estimates?

[The Chair, Conservative, Bob Mills]

I think we should do the estimates, and we can discuss that right after.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you.

[Mark Warawa, Conservative, Langley, BC]

Were you going to deal with the point of order?

[The Chair, Conservative, Bob Mills]

I'll do that afterwards.

Yes, go ahead.

[Basia Ruta, Assistant Deputy Minister and Chief Financial Officer, Department of the Environment]

Thank you, Mr. Chair, for the opportunity to make a few opening remarks. I'll try to be very brief. I also wanted to say that I'm very happy to be here, as Environment Canada's chief financial officer, to respond to questions on the department's main estimates.

That said, I can understand why the committee might consider holding another hearing to discuss the supplementary estimates tabled yesterday. I would happy to appear before the committee again at a later date, if it would like me to do so.

Joining me today at the table are two officials: Mr. Hani Mokhtar, senior financial officer and director general of the financial services directorate at Environment Canada, and Mr. Craig Ferguson, director general of corporate management. We also have here at this meeting a few additional departmental officials, individuals who may also come forward, as appropriate, to answer some specific questions that committee members may raise if more detailed knowledge is required.

I would also like to mention that the Environment Canada main estimates also underwent a number of changes over the past year, compared to the previous year, and I would like to briefly explain these.

First, in keeping with ensuring that our strategic outcomes and our results structure align with government priorities, our program activity architecture has changed from the previous year and will continue to do so as we work to ensure that the results we are seeking are being kept ever fresh on an annual basis. This is done in concert with the main estimates production cycle. Put simply, the main estimates for 2006-07 would have been largely aligned with the government priorities last fall. Table 8.5 provides a high-level summary of changes in the main estimates. Further, our report on plans and priorities on page 10 provides a useful crosswalk for changes from previous years, which I expect the members of the committee have.

Second, the main estimates are broadly similar, funding-wise, to previous years, considering our pattern of ongoing and sunset funding. What this means is that a good portion of our funding is based on known, ongoing funding. However, a significant portion is also based on temporary or sunset funding. Over the past several years, this sunset funding could have been anywhere from about 9% to about 22% or 25% of funding, annually, in terms of overall spending authorities. This latter element may cause fluctuations year over year and in funding being sought as a result.

Third, as with other departments, expenditure review has impacted Environment Canada. Our ongoing reference, or ongoing levels, are declining. The most recent exercise in 2006-07, just completed, will be felt mostly, over time, in our grants and contributions programs, where there is a total of $7.6 million over three years.

Fourth, in our main estimates, our net of the spendable revenues...in 2006-07 we are budgeting some $75 million this year. This deals with licences, permits, and tailored work for NAVCAN, DND, and other key stakeholders. So our spending patterns for 2006-07 are net of this amount.

Thank you, Mr. Chair. I'd be happy to respond to any questions you may have.

[The Chair, Conservative, Bob Mills]

Good. Thank you very much.

If we could start, I believe you're going to split your time.

[John Godfrey, Liberal, Don Valley West, ON]

Thank you very much for coming.

I'm looking at a couple of things. One is part III of the estimates: plans and priorities. I notice what seems to be a contradiction. On page 39, under “Program Activity Descriptions”, under 4(b), the heading reads: “Canadians understand the impacts of climate change and adapt to its effects.” Then the next couple of pages are a fairly graphic description of the sorts of challenges Canadians are facing, particularly in the north. And there's a call there for more resources for adaptation and for dealing with impacts.

If I then look at the four strategic outcomes of the department and their associated expenditures, I come to the fourth strategic outcome, which is, “The impacts of climate change on Canada are reduced.” And I see that we're spending only 2.5% of the program budget of the department. There seems to be a dissonance, if I may say so, between the declared strategic outcome.... Everything else gets about a third of the funding. Natural capital, weather and environment predictions, and effects of pollution and waste each get over 30% of the funding. Yet the big one, the very big one, which you properly describe on pages 39 and 40 of section 3, gets only 2.5%, and indeed on page 42, you seem to have pretty much put out of business the Canada Emission Reductions Incentive Agency. Can you help us with this contradiction?

[Basia Ruta]

Thank you very much for the question.

I'd like to make a couple of points just to provide some context. We're a largely science-based organization. Something like 60% or 65% of our resources are based on that. In terms of our strategic outcomes, science deals with a lot of that. So in terms of what was actually captured under the climate change particular strategic outcome, that's not to say that it wouldn't be informed from the other strategic outcomes. I'll ask my colleague, Craig Ferguson, to provide a few more insights in a moment, but I can say, again, it's not to say that just solely the money on climate change, as we have there, is dealt with investment-wise in a very discrete sense.

A lot of this--for instance, “Canada's natural capital is restored, conserved, and enhanced”, “Weather and environmental predictions and services reduce risks and contribute to the well-being of Canadians”, and “Canadians and their environment are protected from the effects of pollution and waste”--deals with very basic science that helps inform in terms of the adaptation and the knowledge we need to bear in order to be able to model and deal with our commitments and also our objectives related to climate change.

In terms of ECERIA--thank you very much for asking that question--under the previous government, as you know, the priority was to establish this particular agency for the purchase of emission credits. Under the new government, as I think our minister mentioned in reiterating the government's policy, this would no longer be the case in 2006-07. The main estimates go back to the fall, so we do have $49 million in there, but as we mentioned in our report on plans and priorities, there will be no money spent in regard to this as a result of the new priorities established by the government.

I'll ask Craig Ferguson to give you a bit more precision on what is contained within that fourth strategic outcome that would align with the 2.5% of the budgetary estimates.

[Craig Ferguson, Director, Strategic Development Policy Coordination Branch, Department of the Environment]

Thank you.

Basia Ruta has already expressed most of what I would have added, but perhaps I can emphasize the fact that in terms of climate change programming government-wide, while Environment Canada certainly does provide some of the science activity and science analysis related to that, the department also tends to play a significant role in terms of broad policy coordination. The amount of resources in our main estimates has been a relatively minor proportion of government-wide expenditures. A lot of the actual program delivery related to climate change has been delivered through other departments.

So while it would appear to be a relatively modest proportion of the departmental budget, there is, as Basia mentioned, some spending also under other strategic outcomes across the department. Also, a lot of our work is related to policy coordination, which is not necessarily resource-intensive in the same way as direct program delivery.

[The Chair, Conservative, Bob Mills]

Mr. Silva.

[Mario Silva, Liberal, Davenport, ON]

Thank you very much.

I guess what I'm a bit concerned about when I look at the estimates is that there is little bit of disconnect between what we've been hearing from the environment commissioner on what should be the priority. Of course, we all know the importance of climate change. It's the number one priority that's facing the environment at this moment. Just yesterday a British report came out saying that if we don't take care of this critical issue, the cost could be in the trillions of dollars in the long term. Government has to put money and resources at this very moment toward fighting climate change. That should be the number one priority for all those who really care about the environment.

My concern is that when I look at the estimates, only 2.5% is to deal with climate change. But we all know that should be the number one priority. There is a disconnect between what we're doing on the committee, what we're trying to achieve, what we saw in the report that came out from the environment commissioner, and what has actually happened.

Is this a lack of political will? Why is that number so small?

[Basia Ruta]

Thank you, Mr. Chair.

I'll reiterate what I mentioned before. On its own, climate change is not something that you can deal with. It's an impact, if you like, based on a lot of other activities that we do. So in terms of how we organized our program activity architecture last year, which is essentially how you are reading the estimates, the climate change portion per se was really quite discrete and focused on some particular objectives, informed by the work that we're doing from the other strategic outcomes, and also informed by the horizontal nature of the activities we undertake with the rest of government officials. As you know, climate change per se and the environment are not just Environment Canada's responsibility. There are other departments involved with us on this.

In terms of the priority of climate change, I can tell you that as a public servant I am here to deliver on the government's priorities. I'm not one to make the policy; I'm here to make sure I follow what policy is being set. So I can tell you quite confidently, this is what we've done in 2006-07.

In the supplementary estimates, you will see that we are asking for a bit more money, but as the government said this year, they are rolling out the environmental agenda. As the government priorities get set and are approved in the House in terms of funding, those moneys will then find their way in terms of the estimates. That could be either for this year, but also starting in 2007-08.

[Mario Silva, Liberal, Davenport, ON]

I realize that you don't set the priorities; the government sets the priorities. But how would you state that the government is setting those priorities, given the fact that there's been a very urgent call by the environment commission for action by the government on issues such as climate change, which are so critical for the environment?

[Basia Ruta]

Again I would say it's for the government to establish priorities, and as a public servant I'm here to follow them.

[Mario Silva, Liberal, Davenport, ON]

I wasn't stating the fact that you're the one who is setting the priorities. I'm asking, how does the government set the priorities? How do you see the government setting those priorities?

[Basia Ruta]

I think our minister was here a couple of weeks ago providing the next steps. As I understand, over the next little while, 2006-07, it's really a matter of looking and consulting in a number of areas with stakeholders to be able to come up with a much more rigid environmental agenda.

There are some areas where the government has explicitly stated that they do not want to continue, which would be the priorities of the previous government. As we mentioned, that has to deal with things such as investing in international emission credits under the Kyoto Protocol, ECERIA.... As we noted in the report on plans and priorities, that money is essentially frozen. There was about $49 million that would have been directed towards this agency under the former government's priorities. Basically this organization is in the process of being wound up.

[Mario Silva, Liberal, Davenport, ON]

Am I to understand that there has been about a 16% cut to programs? Is that the case?

[Basia Ruta]

As I mentioned in my opening statement--I'll ask Mr. Hani Mokhtar to provide further details. I'd say that we're broadly similar. There's a real particularity with the environment budget. Personally, as chief financial officer, I'm hoping we can stabilize in future years.

Our ongoing core funding could typically be anywhere from 80% of the total funding we get through the years, because over the last several years we've been receiving a lot of temporary, sunset funding on particular initiatives, which last a few years.

So if you look at our public accounts, you would see that typically we spend about a billion dollars a year; our main estimates are about $800 million. You have a whole slew of these sunset initiatives. So it's really difficult to say—have we lost or not?—because it's not really set in stone. That's something we really need to work together with our colleagues and central agencies on to help stabilize over the years.

[The Chair, Conservative, Bob Mills]

I do want to go on to Mr. Bigras.

But I would remind the members that when Mr. Cullen asked for us to have this review, he did provide us with some questions, which we then provided to the department, more or less to focus on. They were advised not to bring all the people who might be able to get into some of the details. I just want to clarify that. Our witnesses have been kind of honed in on the questions Mr. Cullen raised.

Mr. Bigras.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chairman.

I understand your explanation, but there are nevertheless within the department people who are responsible for answering our questions. We know full well that they will very likely not have answers to all of our questions this morning. Nevertheless, they are welcome to take notes if they are unable to answer.

I am looking at page 45 of the main estimates in front of you. I am now reading the second line: "Purchases of international credits generated in other countries that are parties to the Kyoto Protocol. Planned Spending 2006-2007".

My question is the following. Out of this planned amount, have some expenditures been committed? Your note at the bottom says that even though they were originally included in the main estimates, the government would not be purchasing emission credits. Were some expenditures committed anyway?

[Basia Ruta]

Thank you, Mr. Chairman. I would like to point out that if you ever need additional information here at the table, we would be happy to provide it.

As to your question concerning page 45 and the agency, concerning whether we have already spent the money in connection with the credits, the answer is no, and we have not done anything. As I mentioned earlier, this agency was established last year and was to begin operations on April 1. In view of the election of the new government, its priority in this area changed completely. Accordingly, there has been no spending.

Mr. Hani Mokhtar may have some further information to provide.

[Hani Mokhtar, Director General, Financial Services Directorate, Department of the Environment]

Yes.

I would like to point out that these credits were included in the main estimates while awaiting a presentation to the Treasury Board explaining how the agency was going to operate and what its mandate would be. These credits were therefore included, but they were frozen in the department's main estimates, subject to a future Treasury Board decision.

Of course, given the current situation, no submission was made to the Treasury Board. There were therefore no plans for any spending out of those funds.

[Bernard Bigras, Bloc, Rosemont—La Petite-Patrie, QC]

I could not find the National Round Table on the Environment and the Economy in the government's estimates. Is the government funding this round table?