Finance Committee on Nov. 8th, 2017

[Jim Valerio]

Correct.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That's all.

[The Chair, Liberal, Wayne Easter]

I have one point, Mr. Valerio.

We did ask the BDC to come, and the response we got was that ISED would make that representation. We ran into the same thing last year with ACOA.

From my perspective, as chair—we didn't have time to get into an argument about it—when we ask for BDC, we expect BDC, and you with them. You can tell them, in the future if we ask for BDC, we expect BDC to be here.

Thank you.

There are no further questions then.

Do we have agreement to go until 5:50? Votes are at 6:00. We have 26 minutes left. Do we have agreement to move forward?

[Some hon. members]

Agreed.

[The Chair, Liberal, Wayne Easter]

With Treasury Board Secretariat, on division 13, Financial Administration Act, Mr. Sprecher, senior director, expenditure management sector.

Go ahead, Mr. Sprecher.

[Darryl Sprecher, Senior Director, Expenditure Management Sector, Treasury Board Secretariat]

Thank you.

Good afternoon. I am pleased to be here today to speak to clause 261 of Bill C-63, which deals with an amendment to subsection 32(1) of the Financial Administration Act on the control of financial commitments.

Let me put this amendment in context. In June 2017, the House of Commons approved amendments to the Standing Orders that deferred the tabling of main estimates from March 1, or earlier, to April 16, for the next two budget cycles. This deferral makes it possible to include in the main estimates the new funding announced in the budget.

When the main estimates were usually tabled by March 1, before the beginning of the new fiscal year on April 1, Parliament would be asked to approve an interim supply bill to provide departments with sufficient funding to be able to continue operations until all appropriations are approved at the end of June.

The Financial Administration Act, or FAA, currently constrains departments' ability to make financial commitments, such as for contracts or contribution agreements, by requiring there to be a sufficient authority in an appropriation or in estimates then before the House of Commons. The deputy of finance already spoke about this very briefly.

These limits are retained in proposed paragraphs 32(1)(a) and 32(1)(b). However, to begin the fiscal year 2018-19, only the interim estimates and corresponding appropriation will be available until the complete main estimates are tabled roughly two weeks into the new fiscal year. If the government were to leave the FAA as it is now, departments would not be able to reflect the full year's value in contracts or contributions that they sign on or just prior to April 1.

The proposed addition of paragraph (c) to subsection 32(1) of the FAA clarifies departmental financial commitment authorities for the period between the tabling of interim estimates in February and the complete main estimates in April. This would be done by permitting financial commitments to be made against a limit that would be specified in the interim estimates bill.

The second addition, proposed paragraph 32(1)(d), clarifies that commitments may be made against the unencumbered balance of revenues actually received by a department or the amount of a department's estimated revenues set out in the estimates. The commitment limit would be based on the forecast planned spending, including expected revenues, that is known when the interim estimates supply bill is introduced—in other words, the forecast main estimates before new budget measures are taken into account.

To conclude, I would emphasize that these amendments clarify the authorities of departments. They do not add to them, nor do they change their authorities to make payments out of the consolidated revenue fund. Such payments will continue to be limited by the specific amounts set out and voted on by Parliament in the appropriations.

With that, I thank you for your patience. I would be pleased to answer any questions you may have.

[The Chair, Liberal, Wayne Easter]

Thank you for your patience, Darryl. I don't know if this is the second or the third time you've been here.

[Darryl Sprecher]

It's the third.

[The Chair, Liberal, Wayne Easter]

Thank you very much for the explanation and for coming several times.

Are there any questions?

Mr. Dusseault, go ahead.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I just want to be sure.

Does this apply only to the next fiscal year or budget process, or is it something that will always apply in the future?

[Darryl Sprecher]

It will apply to next year and the following year.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Will it no longer be needed afterwards?

[Darryl Sprecher]

That will depend.

If the original standing order change was for two years and the standing order continues after that period, then that will be necessary as well.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

We'll bring to the table division 10, trade within Canada and harmonization of energy efficiency requirements.

From ISED, we have Mr. Fertuck, director general of the external and trade policy branch, and Ms. Hill, special adviser in the strategy and innovation policy sector.

Welcome. Thank you for coming, and thank you for your patience.

The floor is yours, Mr. Fertuck.

[Stephen Fertuck, Acting Director General, External and Trade Policy Branch, Innovation, Science and Economic Development Canada]

Thank you very much, Mr. Chair.

Actually, my colleague, Melanie Hill, will be providing a short explanation of part 5, division 10.

[Melanie Hill, Special Advisor, Strategy and Innovation Policy Sector, Innovation, Science and Economic Development Canada]

Thank you for having us.

To start I'll just provide a quick background about the Canadian Free Trade Agreement. The CFTA, as it's also known, came into force on July 1 of this year, and it's a successor to the Agreement on Internal Trade, or the AIT. The CFTA commits federal, provincial, and territorial governments to a comprehensive set of rules that will help to achieve a modern and competitive economic union for all Canadians.

In order for the Government of Canada to implement certain aspects of the CFTA, associated legislative changes are needed. As such, division 10 of part 5 would enact the Canadian Free Trade Agreement implementation act. It's based heavily upon the implementing legislation for the Agreement on Internal Trade. The nature of its provisions are mostly administrative. The act would establish the responsible CFTA minister, facilitate dispute settlement, permit the award of monetary penalties, allow the appointment of committee members and panellists for disputes, and authorize federal funding for the intergovernmental CFTA secretariat.

Given that the CFTA replaces the AIT, the Canadian Free Trade Agreement implementation act would also repeal the Agreement on Internal Trade Implementation Act.

In order to further demonstrate federal leadership on internal trade, division 10 of part 5 would also propose three amendments to the Energy Efficiency Act, or EEA. First, the EEA would be amended to provide the Minister of Natural Resources with the authority to make technical or administrative changes to existing Governor in Council regulations. These changes must be for the purpose of maintaining harmonization with another jurisdiction.

Secondly, the EEA would be amended to provide the Governor in Council with the authority to incorporate by reference technical standards documents for the purposes of harmonizing with another jurisdiction.

Lastly, section 26 of the EEA would be repealed, which is a requirement to pre-publish regulations in Canada Gazette, part 1, which is duplicative of a Treasury Board directive.

The above changes to the EEA will provide new tools that will allow for the Government of Canada to create consistency in standards across the country, and to ensure that Canada is aligned with other key trading jurisdictions.

Division 10 of part 5 also proposes consequential amendments to the Financial Administration Act, the Department of Public Works and Government Services Act, and the procurement ombudsman regulations by replacing references to the Agreement on Internal Trade with references to the new CFTA.

This division would also repeal the Timber Marking Act. The Timber Marking Act is an outdated federal law from 1870 that applies to only three provinces: Ontario, Quebec, and New Brunswick. It mandates that anyone floating timber on rivers in those provinces must mark the logs and register that mark. As such, it is de facto discriminatory, making it contrary to the non-discriminatory treatment obligation under the CFTA. A formal consultation on the repeal of the Timber Marking Act was held, and all stakeholders who provided comments expressed support for the proposed repeal and did not anticipate any negative impact as a result.

Division 10 of part 5 would be deemed to have come into force on July 1, 2017, to coincide with the coming into force of the CFTA, providing continuity. The proposed legislative changes contained in division 10 of part 5 are not controversial, given that any substantive changes pertaining directly to the CFTA were accepted by provinces and territories during the course of the negotiations, or in the case of the EEA amendments were the subject of consultations in which industry stakeholders, as well as provinces, were highly supportive.

We'd be pleased to take any questions you may have.

[The Chair, Liberal, Wayne Easter]

We have Mr. Kmiec.

The floor is yours.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I have two areas I wanted to ask questions about. I'll start with “Appointments”, proposed section 17. It says in proposed subsection 17(1):

The Governor in Council may, by order, appoint any person to fill any position that may be necessary or advisable, in the opinion of the Governor in Council

But if you look at these other appointments, it's always to appoint a minister or to fill a roster. In this case, it says that basically the Governor in Council can appoint anyone for any positions that they think are necessary or advisable. My interpretation of this is that the government would be able to appoint as many people to as many roles as their government feels responsible for. Then there's the remuneration underneath. They would pay remuneration expenses to these people.

How broad is this appointment power? Is there a roster to fill? Are there specific positions that this is related to, or does this just give the government the power to appoint literally anyone to anything? It seems very broad compared with some of the other sections in this bill, and just more broad than what I've seen across government.

[Melanie Hill]

This appointment authority is brought over from the existing Agreement on Internal Trade Implementation Act, so this wouldn't be a new authority being provided. It would just be transitioned from the Agreement on Internal Trade Implementation Act to the Canadian Free Trade Agreement implementation act.

The authority is generally written in a way that would allow for flexibility for the Governor in Council to, by order, appoint, as you said, any person to fill a position that may be necessary or advisable. At this current stage, there's no particular role that we envision would need to be filled using this power, but it obviously is beneficial to build in such an ability through the Governor in Council by order at the recommendation of the minister or ourselves to make an appointment in order to carry out the agreement.

Without this, we could be in a position where we would have to amend the Canadian Free Trade Agreement implementation act in order to provide such an ability. Rather than doing that, it seemed wise to carry this forward into the CFTA implementation act.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

When the agreement was negotiated, what was the intention of having such a section in there? Was it so that the government could appoint at some point an internal trade czar or appoint a negotiator? I would assume other sections of that agreement cover that. What is intended by a section like this to preserve it into the future? I mean, if you haven't used it before, it seems like a “just in case” clause.

I'm just wondering why we should continue to approve a section like this and give such latitude to the government to appoint whoever they wish whenever they wish.

[Melanie Hill]

I'd just like to clarify that this appointment ability isn't built into the Canadian Free Trade Agreement itself. When you refer to negotiations and to adding such a clause, it's irrespective of the agreement itself. What it is, as I mentioned, is carrying forward this existing authority of the Governor in Council by order to appoint someone from the Agreement on Internal Trade Implementation Act into the Canadian Free Trade Agreement implementation act, although, as I said, it's not envisioned exactly which role this authority would be used to fill. It is worthwhile having such a provision and maintaining such an authority. I do want to highlight that it's not a new authority.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Just so I can be clear, the Government of Canada, the Governor in Council, has never made an appointment under this section or its previous version either. It's a section that has not been used.

[Melanie Hill]

To my knowledge, no, this authority has not been used, but that's not to say that we wouldn't need it in the future. It would be wise to have that ability built into the implementation act so as not to have to muddy up the bill process to make that amendment, but rather just maintain an existing authority, should the case arise in the future.

[The Chair, Liberal, Wayne Easter]

You don't need to rush, Tom. If we don't finish, we only have this one section left, and we can invite the—