Evidence of meeting #136 for Finance in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was million.
A recording is available from Parliament.
Liberal
The Chair Liberal Wayne Easter
I'll call the meeting to order. Pursuant to Standing Order 81(5), the committee will look at supplementary estimates (C) for 2017-18, vote 1c under the Canada Revenue Agency and vote 1c under the Department of Finance, referred to the committee on Monday February 12, 2018.
To start we have from the Department of Finance, Ms. Laniel, chief financial officer; Mr. Jovanovic; and Mr. Stewart.
The floor is yours, I believe, Adelle.
Adelle Laniel Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
Good morning, Mr. Chair and members of the committee.
As chief financial officer I am the lead executive responsible for financial reporting and disclosure of the 2017-18 supplementary estimates (C) for the Department of Finance. With me today are officials to assist in providing you with a more in-depth perspective on the rationale and policy that supports the numbers within these estimates.
The 2017-18 supplementary estimates (C) reflects a net decrease of $463 million in departmental budgetary expenditures stemming from forecasted decreases in statutory spending of $466.9 million and a $3.9-million increase in voted expenditures, representing a net change of 0.5%. That brings the department's total budget to about $90 billion.
These statutory items are listed in the budget document for information purposes and will not be part of the supply bill. However, they are included in these estimates to provide a more complete picture of total expenditures.
Within the statutory forecast the contributing factors to the $466.9 million decrease are as follows.
There's a $503 million decrease in interest on unmatured debt largely driven by lower projected inflation for 2017 and 2018 by private sector economists consistent with the 2017 fall economic statement, which results in lower expected real return bond adjustments for 2017 and 2018. There's a $52 million decrease due to higher recoveries of alternative payments for standing programs driven by an increase in the estimated value of Quebec's basic federal tax. There's a $10.8 million decrease due to a higher use allowance recovery, which also reflects an increase in the basic federal tax in Quebec.
These decreases are partially compensated for through the following increases: a $19-million funding increase for the Canada Infrastructure Bank for the activities the bank will undertake over the short term to establish the organization; a $35-million increase for other interest costs, which represent in large part higher interest rates than what was forecasted by private sector economists, in accordance with the Fall Economic Statement 2017, which has an impact on the average long-term bond rate used to calculate the interest on bonds related to the public service pension funds in terms of services previous to April 1, 2000; finally,
a $44.3 million increase for additional fiscal equalization payments to Nova Scotia due to updated data used for the calculation of the payment.
New vote 1 funding requirements are $3.9 million and consist of the following.
There's an amount of $1.8 million for the department's role in the 2018 G7 Summit. These costs involve policy analysis to shape the finance track work feeding into the G7 Summit and logistical support for related events including outreach.
There's an amount of $1.3 million related to the financial sector policy funding renewal to ensure that Canada's federal financial sector remains robust and effective and meets the evolving needs of consumers and businesses.
There's an amount of $0.4 million for personnel costs to support the corporate asset review program; and an amount of $0.4 million to support the department's oversight role in the Canada Infrastructure Bank.
Supplementary estimates (C) also include an increase of $53.4 million for non-budget expenditures planned for 2017-18 to purchase initial offerings in the Asian Infrastructure Investment Bank, pursuant to the Asian Infrastructure Investment Bank Agreement Act.
This concludes my overview of supplementary estimates (C) for the department.
We would be pleased to answer any questions the committee members may have.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Ms. Laniel.
Before I go to Mr. Sorbara, on the equalization, and I'm mainly looking at it for P.E.I., how does that work over time? When are the figures finally complete is what I'm asking? Is it three years after the fact? You look at certain data, and then the equalization payments apply. How does that work?
Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
Okay. I will introduce Mr. Countryman.
Galen Countryman Director General, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Hello. Galen Countryman, director general for fed-prov relations at Finance.
Director General, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Your question is how do the equalization payments work?
Liberal
The Chair Liberal Wayne Easter
How do they roll out and how are they calculated over time? They change over time as the facts become more accurate.
Director General, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The equalization payments are calculated every year. The total amount grows in line with the gross domestic product, it grows in line with the economy. The figures are calculated every December for the upcoming fiscal year. We would have calculated the amounts for the 2018-19 fiscal year this past December.
Liberal
Director General, Federal-Provincial Relations and Social Policy Branch, Department of Finance
For equalization in particular, it's a one-estimate system, so we only calculate it once and that's the amount that actually goes. There's no revision to the actual equalization amount except for the equalization payments.
Liberal
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Thank you, Mr. Chair.
Good morning, bonjour, to everyone.
MPs receive a lot of material to read, and here on the finance committee we're bombarded with material to read. One thing I'm trying to understand is the estimates in terms of the budgeting cycle. Our government has made a number of recommendations in aligning the budget and the main estimates. Can you provide colour on that, and how useful that alignment will be to MPs and to others who look at this information?
Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
I will let my colleagues answer about the alignment of the estimates with the budget. I apologize.
Brad Recker Director, Fiscal Policy Division, Economic and Fiscal Policy Branch, Department of Finance
Hi there, I'm Brad Recker from the Fiscal Policy Division.
We have been pretty focused on the alignment between the budget and the estimates over the past couple of years, and in budget 2018 we made some significant progress. In annex 2, in the back pages of the budget, you'll find tables that, on a department-by-department basis, take you from planned estimates for the next fiscal year to planned expenses budget-wise for the top 23 spending departments. In addition, we've added a table in the budget that has cash disbursements approved through the budget to each of the departments through budget 2018. That's our first step in moving toward better alignment of the two documents.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Okay.
In my view, the number one responsibility of MPs is to have an overview of what government spends and to be able to understand how the process works. I think it's analogous to when you're looking at a company's finances and when they have an investor day and when they release their results in the timing of the two. I've made that point. When I arrived on the Hill, it was difficult to understand the timing of the process, so I'm glad to see that's being fixed.
Is there anything you wanted to add, Mr. Recker?
Director, Fiscal Policy Division, Economic and Fiscal Policy Branch, Department of Finance
No, that would be our first step for sure.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Thank you.
In terms of this document, “Supplementary Estimates (C)”, versus your introductory remarks, Ms. Laniel, why are there differences in terms of the numbers and everything? Is the information in here a subset of the information in here that's being approved on this?
Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
The comments I was giving were the net changes, but they should be aligned.
Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
Yes, so maybe it's because of the order; we went from the highest to the lowest decrease and then increase, so the order may have been slightly different.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
When I read through the estimates document, it just seemed like there was more than $4 billion increase. Maybe I'm referencing it wrong: “Supplementary estimates 2017-2018 provides information in support of voted budgetary expenditures in the amount of $4 billion for a total of $115 billion, representing a 3.6 increase over the authorities to date.” That's on page 1-3 of the “Supplementary Estimates (C)”
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
“Supplementary Estimates (C), 2017-18”, for the year ending March 31, 2018, Chair. I was just trying to understand the numbers in terms of how they're connected between this document and this document.
Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
The “Supplementary Estimates (C)” document we're going to today is purely Department of Finance versus the entire public accounts.