Finance Committee on March 1st, 2007

[James Ralston]

That is correct. The amounts we're showing at the moment are the up-front costs. There will be some amount required for ongoing maintenance of the activity once it is set up; we're not asking for that ongoing funding in the supplementary estimates. We will have to reflect those either in subsequent main estimates or subsequent years' supplementaries.

[Pierre Paquette, Bloc, Joliette, QC]

Then, we'll see next time how well you have succeeded in reducing program administration costs.

Thank you.

[The Chair, Conservative, Brian Pallister]

For the committee's benefit, we'll need the indulgence of committee members to distribute this, as it is just in English.

I'd like to thank my colleagues from the Bloc for their cooperation.

These will be distributed now, and they may assist committee members in their further questions.

Mr. Wallace, we'll go over to you.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

Thank you for coming today. I'm relatively new and I'm trying to get my head around this. There are the main estimates, and then there are the supplementary ones, I guess you'd call it, or supplementary estimates (A), and this is the second set of supplementary estimates, the supplementary estimates (B).

Am I reading it correctly when I see that the department overall is at $3.5 billion? Where are we in total spending? Am I about right?

[William Baker]

That is correct. It is roughly $3.5 billion.

[Mike Wallace, Conservative, Burlington, ON]

In your case, particularly when there are budgets in the year, it throws off a little bit what you may have estimated in your main estimates or in the main budget. I hate the word “estimates”; I like the main budget. Then you're asking for more money throughout the year based on some changes the government has made along the way. Is that an accurate statement?

[William Baker]

Yes. If I may, Mr. Chair, the budget's coming down when it does frankly happens too late for our purposes of having our budgetary plans set for the coming fiscal year, so once the budget is announced, we undertake a very thorough exercise of costing. We try as well as we can to get those in on time for supplementary estimates (A). Sometimes things are still evolving. You have a budget statement, but the technical work required to flesh it out may take longer than the deadline required to meet something.

[Mike Wallace, Conservative, Burlington, ON]

Is this a normal process for you, year after year? It doesn't happen just because a Conservative government has been elected, does it?

[William Baker]

No. To my knowledge, the Canada Revenue Agency has received supplementary estimates, either (A), (B), or both, almost every year.

[Mike Wallace, Conservative, Burlington, ON]

I haven't had a chance to look at the list yet, but is there any money that Mr. Pacetti was talking about? You talked about the Conservative budget, the last government budget that was passed. Is there any money in there from things that they announced in November and things that had changed prior to our taking office, or is it all budget-related?

[William Baker]

To my knowledge, it's all related to those items I mentioned, which are the federal budget, the agreement with Ontario for corporate income tax, the softwood lumber agreement, and the provincial allocation initiative--but perhaps, Jim, there may be something since then.

[James Ralston]

I believe there's an amount.... In the latter part of 2005 there was a fiscal statement that announced a reduction and then a rate reduction. That was not a budget, but a fiscal statement; the costs related to that were included in our budget request for 2006.

With the exception of that one amount, all of the rest related to the 2006 budget.

[Mike Wallace, Conservative, Burlington, ON]

Since we're having a budget coming in two weeks, it's reasonable for this committee, whether I'm on it or not, to understand that based on what's announced and assuming it passes, with changes in this year's budget there will be supplementary requirements from the Canada Revenue Agency, which collects the actual money and does the paperwork. A lot of this money goes to whatever those programs may be to advertise to Canadians so that they understand what deductions are available and what changes have been made to the forms; it is also for training people to actually implement those changes, if there are changes.

Is it a reasonable statement to say that we can expect this year after year?

[William Baker]

I think that's a reasonable assumption. Perhaps I can just point out that it's extremely important that we do this well. If we don't do this well, we, and I dare say you, will hear from your constituents. We hear from the public and we hear from the stakeholders that they don't know what to do. Paying tax is never easy, and the act of completing the annual income tax filing is never easy, even though we try to make it easy. It's extremely important that when people have questions, they get answers. It's extremely important the guides are up to date and that our IT systems match the budget. So you can expect, I think, this to be pretty much an annual exercise.

[Mike Wallace, Conservative, Burlington, ON]

My final question, if I have time.... You're not actually a department; you're a separate agency, but you didn't just come up with these numbers yourself and they weren't not tested out. Could you tell me what actually happens? I didn't understand this. You have to go to the Treasury Board and to Finance for answers on this. Do they review those numbers? What's that process?

[William Baker]

They do, and I'll ask the person who actually has to do this for us to answer that question, with the chair's permission.

[James Ralston]

When any measure is announced or contemplated, we will be asked to provide an estimate of what it will cost to implement. What we will do is this. I will get in touch with all my colleagues who run the operations, be it the audit, the processing, or the collections areas. We will ask them, in respect of a particular measure that's being proposed, whether they would envisage a cost to implement it, and we will ask them to declare that cost.

We will assemble that information and then it will go to Treasury Board in what we call our omnibus submission. It's just the jargon we use to describe the budget submission each year. Treasury Board will then scrutinize our numbers and they will decide whether we're making reasonable estimates or not. Once they are satisfied that we've done a competent job of estimating the costs, they would recommend approval of that to the Treasury Board, and ultimately it will then appear in the supplementary estimates.

[The Chair, Conservative, Brian Pallister]

Thanks, Mr. Wallace.

Mr. Christopherson.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much, Chair.

It's good to see you again. You will know from the work of the Auditor General that there have been concerns that she's raised in a specific chapter about supplemental estimates going up significantly in the last few years, as opposed to the years prior. I believe--and I'm going from memory now--it was about 4.5%, on average, in the five years preceding the immediate past five years, to over 10%. I want to know if this is an increase over last year, the dollar value, and if so, by roughly how much.

I see you all struggling, so I'll leave one of you to search that number--

[William Baker]

Perhaps I have part of the answer. In terms of how this relates to the supplementary estimates that would have been requested last year, we will have to search for that.

I will put these supplementary estimates (B) in perspective of our overall budget. Before supplementary estimates, we were looking at $3.431 billion, and what's being requested in supplementary estimates (B) is $35.4 million, so it's whatever percentage that is. It doesn't represent a major amount of our base funding.

[David Christopherson, NDP, Hamilton Centre, ON]

No, that wasn't my point. It wasn't based on the base; it was based on the actual dollar value of last year's supplements.

I'll leave that with you to work on.

Chair, I'm fine having that sent. It's not something I need right this moment, but I am interested, since we're still struggling with that at the public accounts committee.

Now I'd like to deal with the issue of the $5.878 million going for the funding to implement a national initiative to address interprovincial tax avoidance by corporations. You touched on it briefly through other questions. How much tax avoidance are you speculating we're losing? How much tax avoidance, I guess, is being successful, would be the question? How much money are we losing?

[William Baker]

Mr. Chair, I think there are two parts to your question. This particular initiative is not designed to identify tax avoidance, but rather to make sure that individual provinces are getting their proper share. For instance, when we are auditing a large corporation that is doing business in many provinces, it's important that, whichever province you're in--and we're doing that on behalf of the province--they get the proper amount credited to the province--

[David Christopherson, NDP, Hamilton Centre, ON]

I'm sorry. Then the question really is, how much are the provinces losing? Obviously somebody's losing money or you wouldn't make the changes.

[William Baker]

This is designed to make sure the pie is correctly cut, and--

[David Christopherson, NDP, Hamilton Centre, ON]

Is it not right now?