Environment Committee on March 10th, 2020

[Lloyd Longfield, Liberal, Guelph, ON]

In terms of setting up goals and relying on provinces.... We did a pan-Canadian framework for climate change. Some provinces already had their own framework in place and we adopted those through agreements. Some provinces later backed out of theirs and we had to put some targets in place. The pan-Canadian framework is relying on sub-governments all the way down to the municipal levels.

Do you have auditors in the other orders of government who you work with to comment on how the interaction needs to work in terms of efficiencies?

[Andrew Hayes]

Yes, we do.

I would say that it was one of the outstanding successes of my predecessor, Ms. Gelfand. She issued a collaborative report on climate change that presented the audit findings of nearly all of the provincial auditors general, along with the findings that we presented to Parliament. It presented one of the few national pictures outside of the ECCC work that was done.

We explore those opportunities, primarily with the provincial auditors general. There is an organization called the Canadian Council of Legislative Auditors that includes consultation with municipal levels as well. We do have opportunities to explore that collaboration.

[Lloyd Longfield, Liberal, Guelph, ON]

That would be an interesting organization for our committee to have more information on. It would be very helpful if you could provide any links to us.

[Andrew Hayes]

Absolutely.

[The Chair, Liberal, Yasmin Ratansi]

Thank you very much.

I thank the witnesses for being here.

We will suspend the meeting for a few minutes to let the other witnesses come.

[The Chair, Liberal, Yasmin Ratansi]

Committee members, please take your seats.

This is going to be an interesting topic. You have a deck in front of you. I have gone around to each side and asked whether you want to ask questions. If you do, you'll be sharing your time with your people if you have to. Six minutes are allocated in the last round.

Welcome, Mr. Purves. My cousin's name is Purves. It's her first name, though. It's interesting. She spelled it differently.

Madam Santiago, welcome back. I think I see you every time. We met at government operations.

They will take us through the deck. Then we could ask specific questions as to how we can read this and ask the minister. The minister is coming on Thursday,

With that, the floor is yours.

[Glenn Purves, Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat]

Good morning, everyone.

I just want to make sure that you have in front of you the deck that we provided to the clerk for distribution.

Thank you for inviting us to come and talk about the business of supply. I'll give a short presentation on the business of supply; the roles of the Treasury Board, the president and the secretariat; and the key dates and documents.

Just because this is the first lap around the track on estimates and supply for a lot of people here, slide 2 is a good slide because it sets out that the Constitution and the Federal Administration Act require Parliament to approve all government spending.

We classify spending based on the type of legislation used to approve it. What we call “voted spending” is approved through an appropriation act for a particular year. Through appropriation acts Parliament approves “up to” amounts and places conditions on the use of funds. In contrast, statutory expenditures are authorized through any piece of legislation other than an appropriation act. There may or may not be limits on the amounts spent or the time frame for spending.

To help inform parliamentarians' review of appropriation bills, estimates documents are tabled in Parliament and give details on planned spending. The Treasury Board, its president and its secretariat all have roles to play in the creation of estimates documents and other facets of the business of supply.

The president of the Treasury Board tables a number of documents in Parliament, main and supplementary estimates. A couple of weeks ago we tabled supplementary estimates (B), which are the last supplementary estimates of the fiscal year 2019-20. Last week main estimates were tabled, which effectively are setting up the foundation of spending for the fiscal year 2020-21.

Departmental plans and results reports—so departmental results reports for fiscal year 2018-19—were tabled a couple of weeks back. Those set out, effectively, the results for the first year under the new policy on results that was put in place in 2017. It's the first vintage year having a departmental results report.

The departmental plans for 2020-21, which are intended to provide additional information and to corroborate with the main estimates that were tabled last week, were tabled this morning. Parliamentarians will have access to both in terms of their review of planned spending for 2020-21.

At the end of a year, so after a year is complete, there's the tabling of the annual financial report, or the release of it by the Ministry of Finance and Minister of Finance, and then the tabling of the public accounts, which provide the reporting on the year that was. The public accounts for fiscal year 2018-19 were published after the election in December.

The Treasury Board plays a central decision-making role in the government's procurement activity. It carefully reviews and approves the expenditure plans of departments and agencies.

The secretariat helps the Treasury Board and the president with the business of supply in the following manner.

The secretariat prepares the estimates documents and provides advice regarding departmental planning and reporting on results. It oversees centrally managed funding that may be allocated to other organizations throughout the fiscal year. It reviews spending plans to ensure their effectiveness and efficiency and their alignment with government priorities.

Slide 4 is a useful slide because it goes through the steps in the supply process. We often use “estimates” and “supply” interchangeably. Supply is just the broader process of coming to Parliament in seeking funding for government operations.

Before items appear in estimates, a Treasury Board approval is sought through a submission or, in the case of a simple adjustment, such as a transfer or previously approved funding, in aide-mémoire documents. Estimates may be tabled in each of three supply periods set out in the House of Commons Standing Orders. The estimates are tabled in advance of the related appropriation bill to allow for study by parliamentarians. When you see the blue book, that's the study document. The appropriation bill will follow, and that's the actual bill that is tabled and voted upon in the House.

As part of the study of estimates, the Treasury Board president and TBS officials may appear in front of this committee in order to discuss the estimates for the government as a whole, in addition to our department's own plans. I gather that officials from Environment and the minister will be coming to speak about estimates, I believe later this week. That's part of their process. Other ministers and departmental officials may appear before committees responsible for their review of their estimates, which corroborates with that.

On the last allotted opposition day in a supply period, appropriation bills are introduced and voted on in the House. The bills are subsequently voted on in the Senate. Appropriation bills come into force upon royal assent. In addition, the Governor General signs a warrant authorizing expenditures from the consolidated revenue fund to be released. Only when that warrant is signed are departments able to access funds as specified.

If you look at slide 5, you will see this question that we get quite often about just understanding and following the budgetary authorities throughout the fiscal year. Just stepping back, the main estimates are tabled under the current Standing Orders. Main estimates are tabled by March 1 every year and present a full year of funding for the upcoming year.

The mains support two separate appropriation bills, so there's a kind of two-step we do in order to get access to funding. What we call “interim supply”, for approval before the end of March, provides sufficient resources for organizations until the end of June. The whole idea is to provide funding to organizations for the first three months of the fiscal year until such time as a second appropriation bill for full supply can be introduced in June for the remainder of the resources set out in the main estimates. It gives more time for parliamentarians to be able to review this.

Departmental plans are tabled soon after the main estimates, as has been done today, and give details on planned goals and activities as well as the associated financial and human resources. On supplementary estimates—you'll hear a lot people call them “supps (A), (B) and (C)”—the supplementary (A)s are effectively the first supplementary estimates to be tabled, typically in the spring. Supplementary (B)s are typically tabled in the fall and supplementary (C)s typically in the winter.

Supplementary estimates, of which you can expect two or three in most fiscal years, present additional resource requirements above amounts in main estimates. These often reflect new spending announced in a federal budget, as well as adjustments to previously approved funding, such as transfers between organizations or between votes.

Treasury Board central votes support the board's role as an employer of the public service and the financial manager. Funding in these votes is allocated among organizations throughout the fiscal year, based on specific conditions. For example, the carry-forward votes allow organizations to access funds, up to certain limits, which were unspent in the previous year.

At the end of a fiscal year, again, as I mentioned earlier, the public accounts report on total authorities and actual spending, while departmental results reports report on what was achieved related to the goals set out in the departmental plans.

Finally, we have a website called GC InfoBase. It is kind of the one-stop shop if you're interested in understanding the funding of programs by departments, where it's going, understanding resources and FTEs to support these operations. Then when we do the results and the government tables the departmental plans, as well as the departmental results report, there's a portal on results that you can go down and look per indicator and identify what's going on per indicator for a department, including a roll-up by department.

I'm spending a disproportionate amount of time on this because it is a very, very useful tool to understand the business of supply and the business of government. It has a lot of information there. It's very user intuitive. The OECD has regularly cited it as a best practice. We have one, the U.S. has USAspending and each leading country on central treasury management and reporting has systems like this. The whole intention is to provide information to Canadians and to parliamentarians so you can formulate better questions and think through the spending that is produced in front of you through the supplementary estimates documents, as well as the main estimates.

Why don't I leave it there? I'm open to any questions people might have.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

In the essence of time, it will be a five-minute round, then two and a half and two and a half.

Go ahead, Mr. Mazier.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Thank you very much for those presentations and information. I can barely wait to get to the website to understand this fully.

How does this all link back to the budget? Publicly, we all worry about it and we toil over it. It's all in the media. Where are we in this budget process?

[Glenn Purves]

You have two accounting systems. You have an accrual accounting system from the standpoint of our fiscal track. When you look at the budget, you'll look at the economic situation; you'll look at the forecasts that have been provided by the private sector forecasters; and you'll look at indicators such as nominal GDP growth, nominal GDP levels, interest rates, employment rates, the price of oil—all these different elements that feed into a projection on a fiscal basis on the fiscal track, but on an accrual basis.

From a very high level—and I might oversimplify this—if you take this TV in front of me, maybe it is worth $1,000. On a cash basis, maybe in year one you need $1,000 to be able to purchase that TV. We in the estimates world, in the supply world, operate on a cash basis, and with departments and so forth. So when we're coming to you with these estimates documents asking for parliamentary approval, it's on a cash basis. On an accrual basis, it's a bit different. That TV might have a lifespan of 10 years, and so it may be $100 a year for 10 years. So the fiscal impact is $100 as opposed to $1,000.

Again, it's an oversimplified example, but it gives you a sense that there is a distinction between accrual accounting and cash accounting. The budget reports on an accrual basis, and it provides not only the projection of government spending but also changes in the projection for, say, the fiscal balance—what the surplus or deficit might be projected in any given year—on the basis of the accrual projection. However from a supply standpoint, we basically are coming forward with main estimates and supplementary estimates that are seeking the cash needed to be able to do the operations.

When you look in the budget document, if you looked at the last year, you'd see that it included a reconciliation between the cash and the accrual on an aggregate to give you a sense of how they went from having, say, $300 billion to having about $360 billion on an accrual basis.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Okay. Thank you.

Then as far as a committee goes, you come to us, you show us the supplementaries—this is how the cash is going out. What happens if there's a discrepancy? They said they were going to spend $100 million, and haven't. That's one discrepancy. Well, they can't overspend, obviously. What do we do as a committee, as parliamentarians? Where do we interject in that and point it out? What powers do we have here, as you're presenting this to us?

[Glenn Purves]

As a committee you're making recommendation. You're going back to the House and recommending.

In terms of what's presented in front of you, say, there's a $5-million item you see under Environment, and I'm just—

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

What happens with underspending?

[Glenn Purves]

Effectively, you're always being asked to approve an “up to” amount. The authority that's being asked of you is, do you approve up to $5 million in this vote? You're being asked to provide the authorities that are on that main sheet by vote.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

What happens when it's short?

[Glenn Purves]

There's a description.

If you're short, then the public accounts will effectively show what the reporting has been. There will be a projection of the results for that fiscal year through the annual financial report as well as the public accounts. I think it's part II of the public accounts, which lines up quite well with respect to the estimates.

[The Chair, Liberal, Yasmin Ratansi]

You have 10 seconds if you want.

[Brad Redekopp, Conservative, Saskatoon West, SK]

I have a quick question. You referred to the “blue book”. What is the blue book?

[Glenn Purves]

I'm sorry, this is it right here. If you go online and look for the 2020 estimates, you see that it's effectively a blue book that provides that lens. It's old terminology. I apologize for that.

[A voice]

Fair enough.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

Mr. Baker, you have five minutes, please.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks, Chair. Thanks very much for coming in and briefing us.

My background is in business. I have a couple of business degrees. Before being elected here federally, I was elected provincially to the Ontario legislature and sat on the Treasury Board Secretariat there for four years. You and I could have a long discussion about accrual accounting, cash accounting, and how governments make decisions and manage the fiscal health of the government.

What I want to ask you is something that I hope will be useful to my constituents who are watching at home or may read the transcript of this briefing at some later point. You talked, in your presentation, about supplementary estimates, about how they provides additional authorities for spending. Just at the most straightforward summary level, could you explain why we need them? What causes us to require additional authorities to spend?

[Glenn Purves]

Years ago we would just provide what we call the “voted amounts” in the main estimates. The government tabled the main estimates last week, and they total about $125 billion. We also provide information on statutory amounts so that Canadians and parliamentarians have a lens of the total spend. Ultimately, what it will be in an appropriation bill for Parliament to vote upon is that $125-billion component of the main estimates.

Those main estimates are based on a cascading series of government decisions that have been taken over time. So you have a stock of this base spending for government operations going forward, but there may be new initiatives that come about through either a budget or a fall economic statement, or just initiatives throughout the year that the government is recommending for approval and that go through Treasury Board. Once that happens, then those supplements, effectively, are brought to bear. Any government that has operated has always operated on the basis of being able to bring forward supplementary spending throughout the year to be able to build on the main estimates based on the priorities of the day, and to deal with the initiatives.

This process has existed since 1867. The broader supply process is probably one of the oldest in government. There are three supply periods designated specifically because there's an expectation that there will be new spending decisions being taken in support of critical services and so forth for Canadians through the year. As such, those supply periods and those supplementary estimates provide the vehicle by which parliamentarians can consider them and be able to vote on them.

This is standard practice that has existed for a long time, and it's probably very similar in the Ontario system.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Absolutely, it is. A constituent could be watching this at home and thinking, “Why would the government lay out a budget and at some later point, at these various points in the cycle, come back and say it needs more money or supplementary estimates?” If one of my constituents were sitting here today and asked why we need supplementary estimates or additional authorities to spend, what would you tell them?

[Glenn Purves]

The business of government is a year-long process. Given the fact that the main estimates, for instance, under the Standing Orders are required to be tabled by March 1 every year, if there's a budget after the main estimates are tabled, those initiatives in the budget will have been identified as priorities to go forward that require funding. If it's funding that's identified for the next fiscal year, then in order to be able to seek approval for that, it needs to be reflected in the supplementary estimates.

I guess the answer to your question is that if everyone knew.... If everything were static, if the main estimates existed and nothing changed in life and there were no other initiatives going on, then you might not need supplementary estimates, but that has not been the experience since 1867.