Finance Committee on June 18th, 2019

[Christopher Veilleux, Manager, Finance and Administration, Financial Transactions and Reports Analysis Centre of Canada]

Just to expand on that, again, as part of the $3.6 million that was allotted through budget measures in 2019 for FINTRAC, there was the implementation of regulations component. There's the strengthening of the compliance and outreach, which was spoken to, and expanding the public-private partnerships, which was also alluded to in the response, as well as the disclosure recipients. Beyond that, we do have the trade fraud and trade-based money laundering component that was added.

Those are the primary pillars of the FINTRAC component of the AML/ATF regime changes through budget 2019.

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

Okay, thank you.

I would like an update on another topic.

Last year, the budget implementation bill provided some flexibility for fintechs. The bill provided some regulatory powers to clarify how fintechs could operate in the sector, and it was expected that regulations would follow. Is the work still ongoing? When will these regulations be published in Part I of the Canada Gazette?

[Leah Anderson]

Mr. Chair, I can take that one.

As part of our review of the financial sector statutes that we do every five years, we did a comprehensive review. One of our priority areas of recommendation was to provide greater flexibility for banks and FINTRAC to partner, either through outsourcing or having FINTRAC business activities in-house. We had the opportunity to engage with industry over the spring on how we would operationalize this added flexibility. We are well advanced in the policy development, and we are currently in the process of working on drafting that and would be in a position to bring it forward, we hope, this fall.

[The Chair, Liberal, Wayne Easter]

If nobody else has anything to add, we'll turn to Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair. Welcome, everyone.

The first question deals with the alignment in terms of the process.

When you have the privilege of being elected as a member of Parliament and then coming to this committee, in general you learn there are two processes in place. One is the budgeting process and the second is the estimates process. Can you comment on alignment?

I am asking because from what I understand, we've tried to align the two so parliamentarians can get a better understanding of how the two work.

I use the analogy that it's much like a company. When I worked in the private sector, I would go to a company's investor day and they would lay out a budget for the year, and that would be their investor day. Then through the year, they would produce results and have filings. Those were the actual official monies that were spent or invested. I'd like to hear someone comment in terms of where we are for parliamentarians and how we analyze the estimates versus the budgeting.

[Darlene Bess]

I can speak to that at a very high level.

In the past, items that were announced in the budget often weren't included in the main estimates, so there was a misalignment in the numbers. Since last year, these items have been now included in the budget implementation vote. As you can see, we have three items in there that were announced in the budget. The main estimates process now includes any items that were announced in the budget that we subsequently will seek funding for later in the year. There's a better alignment there.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Is there anyone else who wishes to comment on that?

On the second question, in terms of the $98.9 billion in statutory expenditures, can you give a brief description on those expenditures? The Canadian budget is about $320 billion or so. This is one-third of that budget. We are here to represent taxpayers and ensure that all spending is done appropriately, wisely and with transparency. Can you just describe the government's $98.9 billion in statutory expenditures? What are the major components, please?

[Darlene Bess]

Sure.

There are a lot of transfer payments to the provinces. I would say a big part of that is the Canada health transfer, which accounts for $40 billion. Fiscal equalization to make the provinces similar in terms of economies is about $19.8 billion. Interest on unmatured debt is about $18.6 billion. There are other interest costs, which we talked about earlier, of $6 billion. Territorial financing is $3.9 billion. Payments to the International Development Association are $441 million. Domestic coinage is $88 million. Debt payments on behalf of poor countries to international organizations are $48 million. There are some statutory subsidies of $42 million. We have contributions to employee benefit plans of $12 million, and an additional fiscal equalization offset payment of $8.2 million.

They're mostly transfer payments, I would say, to the provinces through our Federal-Provincial Fiscal Arrangements Act. That's the bulk of it, and obviously there's a large portion on the unmatured debt.

I hope that helps.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Just for my inquisitive purposes, the items are considered what I would call “non-discretionary” spending. It just happens. It's built in.

For items like old age security and GIS, which are paid through government tax revenues, unlike CPP, would they go through the estimates process as well? This is just a point of clarification. I want to understand that better.

[Darlene Bess]

Yes, they would, but they are probably part of Employment and Social Development Canada's statutory payments as well, so similarly to ours, they're not voted items; they're statutory items.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

They're statutory items.

Chair, those are my two questions for this morning. Thank you.

[The Chair, Liberal, Wayne Easter]

We'll go over to Mr. Poilievre, then. We're into five-minute rounds.

[Pierre Poilievre, Conservative, Carleton, ON]

You listed the statutory transfers—the Canada Health Act and the equalization program—but you didn't mention the Canada social transfer. Was there a reason for that?

[Darlene Bess]

That was just an oversight on my part. I skipped the line. I'm sorry.

[Pierre Poilievre, Conservative, Carleton, ON]

What is the amount?

[Darlene Bess]

The amount is $14.5 billion for the social transfer.

[Pierre Poilievre, Conservative, Carleton, ON]

All right. That's the normal amount, which increases 3% a year, on average, I think.

[Darlene Bess]

Yes, that's correct. It's a 3% annual increase.

[Pierre Poilievre, Conservative, Carleton, ON]

Excellent. Okay.

The next question I have is this: What will be the fiscal impact of today's announcement with respect to approving the Trans Mountain pipeline?

[The Chair, Liberal, Wayne Easter]

Go ahead, Ms. Bess.

[Darlene Bess]

I'm sorry, but I can't speak to that because I think it's still being debated in cabinet. I don't have an estimate. Those numbers aren't included in the main estimates that are being studied here today.

[Pierre Poilievre, Conservative, Carleton, ON]

Okay.

We're obviously disappointed that we don't have either minister here. Both ministers are in hiding, and I frankly don't blame them, but it would have been nice to have them here in person. It's really unfortunate that they would put the burden of defending some of these decisions and political incompetence on the backs of hard-working, diligent public servants, who are not to blame for the failures of the government.

With that on the record, Mr. Chair, I will ask this question. Over the last three years, what has been the annualized increase in program spending for the government in percentage terms?

[The Chair, Liberal, Wayne Easter]

Can you dig into that, Ms. Bess, or do you need more clarification?

[Darlene Bess]

I'm here to discuss the Department of Finance's main estimates. For the whole of government, I wouldn't have that information handy unless we were discussing that at the public accounts committee.

[Pierre Poilievre, Conservative, Carleton, ON]

Right.

Does anyone else want to add anything to that?

The next question, then, is this. The government yesterday introduced a ways and means motion to create a new corporate deduction for stock options and to remove the deduction from the recipient of those options—in other words, to move the stock option deduction from the employee to the corporation issuing it. Why was that not included in the Budget Implementation Act?