Finance Committee on Dec. 3rd, 2012

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is meeting 97 of the Standing Committee on Finance. Our orders of the day, pursuant to Standing Order 81(5) supplementary estimates (B), 2012-13, votes 5b and 25b under finance, referred to the committee on Thursday, November 8, 2012.

We have a number of officials here from the Department of Finance. We are starting about a half hour late, and we appreciate the patience of the officials today. We had a vote in the House. So I'm recommending we go to 5 p.m. If we have further questions, we can decide what to do at that time.

I understand, Ms. Harrison, that you have an opening statement on behalf of all the officials. I'll ask you to do the opening statement, Sherry Harrison, assistant deputy minister, corporate services branch.

After that, we'll have questions from the members.

[Sherry Harrison, Assistant Deputy Minister, Corporate Services Branch, Department of Finance]

Good afternoon, Mr. Chair.

My name is Sherry Harrison and I am the Assistant Deputy Minister responsible for Corporate Services at the Department of Finance. With me today are officials to assist in responding to your questions on the 2012-2013 supplementary estimates (B) for the Department of Finance.

These supplementary estimates reflect an increase in departmental spending of $238 million. It is important to note that $230 million relates to statutory items that have already been approved by Parliament through enabling legislation. These statutory items are displayed in the supplementary estimates (B) for information purposes and will not be included in the appropriation bill.

Within the statutory forecast the contributing factors to the $230 million increase are as follows: $1.166 billion decrease in interest on unmatured debt to reflect provisions of forecasted interest rates by private sector economists; $28 million decrease in other interest costs due to revision downward in the average long-term bond rate; $13.5 million decrease in additional fiscal equalization to Nova Scotia; $2.9 million decrease in youth allowance recovery payments from Quebec; $22.3 million decrease in recoveries of alternative payments for standing programs; $733 million increase in payments to the Province of Quebec regarding sales tax harmonization; and $679.7 million in additional fiscal equalization payments total transfer protection to provinces related to the equalization program.

New funding requirements for vote 1 of $1.1 million consist of reprofiles from last year, including the 90 Elgin Street crown site redevelopment project of $179,000; maintaining the strength of Canada's financial system, $588,000; Proceeds of Crime (Money Laundering) and Terrorist Financing Act litigation with the legal profession, $200,000; and the Toronto waterfront revitalization initiative, $179,000. These new requirements are entirely offset by funding available within vote 1 due to savings identified as part of the budget 2012 spending review.

The new funding requirements of $9.9 million in vote 5 grants and contributions are in support of the Toronto waterfront revitalization initiative. A total of $1.4 million available within vote 1 is being transferred to vote 5 to offset these funding requirements, resulting in a net increase of $8.6 million in vote 5.

The $1.4 million consists of a $1.2 million reprofile of tax policy GST technical issues funding to next year, as well as $191,000 for savings identified as part of the budget 2012 spending review.

We would be pleased to address any questions that the committee may have on the expenditures in these supplementary estimates.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will begin members' questions with Ms. Nash, for five minutes, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, and thank you to all of the officials for being with us here this afternoon in place of the minister.

My question is really of a more general nature. I'm wondering if it would be possible for us to get more disaggregated data and more timely information to help us with our decision-making. When we're asked to vote on estimates or budget implementation acts without having all of the details on cost, it makes it very difficult for us to do this, and it's really what we've been doing so far.

I'm wondering if you have any thoughts about how we can improve the system to make more timely information available to us in a more accessible manner.

[Sherry Harrison]

I am familiar with the recent study on the estimates process. There were a number of recommendations that I believe will address some of the issues you've raised with regard to the timing and release of information, particularly with respect to supplementary information being made available in an electronic format on the websites and such. As officials, we're available to the committee to respond to questions.

Clearly the timing of the budget process and the estimates process is a cyclical one, and it is a challenge to follow the flow of new funding requests into the various organizations.

[Peggy Nash, NDP, Parkdale—High Park, ON]

I guess, because this data would probably exist, the question is how we get that in an accessible format and a timely enough manner for us to be able to do our jobs better.

[Sherry Harrison]

A number of the Department of Finance statutory items that are being reflected in the estimates are bringing the estimates up to date for information that was made available through the tabling of the budget. That's information that's already been out in the domain.

With respect to the operating costs, we can respond to additional information. There are other tables on the Treasury Board website that refer to it by standard object and such.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yet, the Parliamentary Budget Officer was forced to take the government to court to be able to get some of the information that he's been asking for.

I guess it's difficult for us to ask detailed questions when we don't have this information available to us. There have been some best practices proposed by the OECD on budgeting processes, and they would help improve transparency. I'm wondering if the department has been reviewing the whole issue of transparency in order to improve the accountability of the budget process.

[Sherry Harrison]

I know with the estimates process, I believe Treasury Board Secretariat officials met with committee to talk about the estimates process.

Did you wish to speak on the budget process?

[Brian Pagan, Director, Fiscal Policy, Department of Finance]

I'm not sure if there's a particular OECD recommendation that you had in mind in terms of best practice, but the Government of Canada is an active member of the OECD and is always looking at recommendations and best practices to improve transparency and the flow of information.

A number of years ago, we moved from a cash budget to an accrual budget, which is considered to be best practice. In the spring of 2009, we introduced a new estimate to the cycle—a spring supplementary estimate—that was intended to better align Parliament's voting on cash appropriations to budget measures that were introduced in a February or March budget. There were also a number of central votes that were created, which were intended to introduce more transparency, for instance, in terms of how departments were using their operating budgets. That was not only to make that clearer in the estimates, but also, because of a spring supplementary estimate, to get that into hands of departments earlier in the fiscal year so they could actually use the authorities available to them.

[Peggy Nash, NDP, Parkdale—High Park, ON]

My time is up, and maybe I'll get a chance later to ask again.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Chair.

Thank you, to the witnesses, for waiting while we attended to the votes.

I have a couple of fairly straightforward questions.

One of the new funding requirements in vote 1 is related to the proceeds of crime, the money laundering and terrorists financing litigation. Can you explain the purpose of the spending?

[Sherry Harrison]

The $.2 million is a reprofile of funding from last fiscal year to the current fiscal year. The funding will be used to support the department's ongoing litigation with the Federation of Law Societies of Canada to defend the constitutionality of the legislation.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

With regard to my other question, roughly $700 million of the statutory items and subsidy is related to total transfer protection payments to various provinces. Can you speak to that program, what it does and who it benefits?

[Sherry Harrison]

Do you want to speak to that, Chantal?

[Chantal Maheu, General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance]

With the total transfer protection, the payments are calculated and provided to provinces to prevent any decline in their major fiscal transfer—the sum of equalization, the Canada health transfer, the Canada social transfer, and any protection they received before. For 2012-13, we've protected so as to maintain the level they had in the previous years.

The amount is almost $700 million, and it's divided among four provinces. There is $362 million for Quebec, $13 million for Nova Scotia, $102.8 million for New Brunswick, and $201 million for Manitoba. This was enacted through the budget legislation—the Jobs, Growth and Long-term Prosperity Act—in June.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Is the $733 million to the Province of Quebec that's related to the sales tax harmonization part of the lump sum piece?

[Chantal Maheu]

No, it's not part of the total transfer protection.

[Sherry Harrison]

In March of this year, the Province of Quebec and the Government of Canada entered into a comprehensive integrated tax coordination agreement, what we refer to as a CITCA, whereby Quebec agrees to make a number of changes to the Quebec sales tax in order to harmonize it with the goods and services tax. The government is committed to making payments over a period of time to Quebec. The $733 million is for implementation of the amended QST.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

The lump sums for the payments to Quebec will be in a different place?

[Sherry Harrison]

Yes. They're under different statutory authorities.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you.

[The Chair, Conservative, James Rajotte]

We will go to Mr. Simms, please.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Thank you. It's an honour to be here.