Finance Committee on May 25th, 2010

[The Chair, Conservative, James Rajotte]

Thank you very much for your opening presentation.

We'll start with Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

In your ministry summary in 2009-10, you had $5.279 million set aside for private collections. Now you're apparently not going to use private collection. Can you explain to me the policy rationale for that change?

[Filipe Dinis]

Mr. Chair, back in 2008-09 the agency discontinued the use of private collection agencies. At that point in time it was part of our strategic review exercise. The agency took over those activities, and we were successful in generating ongoing savings for the government to the tune of $8 million ongoing, so we no longer use private collection agencies to collect on student loans.

[John McKay, Liberal, Scarborough—Guildwood, ON]

You are saying that discontinuing the use of private collection agencies gave a net benefit to the government of $8 million. Is that correct?

[Filipe Dinis]

That's right. In 2008-09 the discontinuation of the collection agencies generated a saving of approximately $6 million, and in 2009-10 it was approximately $11.8 million, for a total ongoing saving of $18 million. Through the leveraging of the existing collections capacity that we have in the agency--

[John McKay, Liberal, Scarborough—Guildwood, ON]

So did you have to ramp up any of your administrative costs in order to be able to take over this portfolio?

[Filipe Dinis]

There was some funding that was provided at that point in time. However, the majority of those savings we were able to achieve through leveraging the existing staff and the existing systems we have vis-à-vis our collections activities.

[John McKay, Liberal, Scarborough—Guildwood, ON]

It's an interesting question as to whether you can do that, whether the cost of running a bureaucracy versus the cost of hiring a private collection agency is worthwhile. It would be an interesting exercise, but sometimes you tend to think that a lot of government costs will just get buried somewhere or other, so you end up comparing apples to oranges.

Did the agency actually conduct, or have somebody conduct on its behalf, an apples-to-apples versus apples-to-oranges comparison?

[Filipe Dinis]

In developing the proposal, the agency actually did an apples-to-apples comparison. In other words, the previous approach that we had—i.e., using the private collection agency...which, by the way, was something that came over to the agency at the time when the government consolidated the student loans program over to the CRA.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So that was primarily student loans?

[Filipe Dinis]

It was primarily student loans.

It was commission-based, so we did a thorough analysis of the methodology in calculating those commissions vis-à-vis our way of conducting business within the agency.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Maybe you could help me with your item 1, which is “Operating expenditures, contributions and recoverable expenditures”. You set it out here as $2.9 billion; and then, under “Program expenditures and recoverable expenditures”, you set out $3.1 billion.

So on one hand you have a saving of $3.1 billion, and on the other hand you have an expenditure of $2.9 billion.

Can you just explain to me why you set it up that way? What's the rationale?

[Filipe Dinis]

Mr. Chair, the numbers that are being referenced are unfortunately an error in the printing of the actual document itself. It has been corrected since. The $3.1 billion number is actually our reference level in 2009-10, as compared to $2.9 billion in 2010-11.

I understand that it has been corrected and is posted on the Treasury Board website. So the display of the $3.1 billion below should actually be the first line.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So you should move the whole thing up.

[Filipe Dinis]

Correct. The full $3.1 billion should actually be right beside the $2.9 billion.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I understand.

So then the net would be...it would be bracketed about $200 million.

[Filipe Dinis]

The exact number is $121 million.

[John McKay, Liberal, Scarborough—Guildwood, ON]

That's helpful. Thank you.

The third question I have is with respect to the children's special allowances. Is this the hundred bucks a month that the government gives each kid?

[Filipe Dinis]

The amount in question is actually $286 per month, per child, and there has been an increase in the number of children receiving this allowance. It has gone from 53,844, more or less, to a 2010-11 projected number of 54,970.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So it's up by about a thousand kids, and a thousand kids cost $4 million.

[Filipe Dinis]

Yes. And the payment went from $278 per month to $286 per month.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Okay.

My final question is about the softwood lumber, a $50-million increase in what is essentially a very controversial program, paying out $479 million to our good and great friends to the south of us. Why the increase?

[Filipe Dinis]

I think it's worth noting that the number that's reflected, the $479 million, is indeed a projection for 2010-11. It's not the amount of actual payments that have gone out. There is an increase in the projection by $50 million, but it should also be noted that last year's payment to the provinces, in 2008-09, was actually $180 million. So we're continuing to work with our colleagues at the departments of finance, foreign affairs, etc., to continue to refine the projections in light of the current financial situation.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So the real money was $180 million, but you're projecting $479 million?

[Filipe Dinis]

It was $180 million in 2008-09. We don't have the numbers yet for 2009-10.