Government Operations Committee on Nov. 2nd, 2006

[The Chair, Liberal, Diane Marleau]

I call the meeting to order. I want to thank you for coming today.

I'd like to ask the committee to remember that these people are public servants. They work for all of us. They are not hired to make political decisions but to implement them and maybe to suggest a different time split. I'd like everyone to keep this in mind during the deliberations.

Now, perhaps you would like to introduce yourselves and make a few opening remarks. Who would like to start?

[Robert Fonberg, Senior Associate Secretary, Treasury Board of Canada Secretariat]

Thank you, Madam Chair.

David Maloney and myself are appearing on behalf of Treasury Board and are pleased to be here to answer your questions in the context of your study of budget cuts announced on September 25, 2006.

We are here to follow up on the appearance on October 17 of the President of the Treasury Board, the Honourable John Baird; the Secretary of the Treasury Board, Mr. Wayne Wouters; and Mr. Moloney.

In his opening remarks the president outlined the government's budget 2006 commitment to fund from existing spending $1 billion of the approximately $5 billion in new spending announced in the budget. The president explained that the savings would be identified by reviewing government programs against the principles outlined in the budget. He explained those principles, and he explained how those measures would be implemented and outlined the principles that'll guide spending in the future.

That's all I have by way of an opening statement, Madam Chair. We look forward to your questions.

Thank you.

[The Chair, Liberal, Diane Marleau]

Thank you.

Mr. Hawkes.

[Mike Hawkes, Chief Financial Officer, Department of Public Works and Government Services]

Good morning, Madam Chair.

My name is Mike Hawkes. I'm the chief financial officer of Public Works and Government Services Canada. I'm here to discuss how the Department of Public Works and Government Services has contributed to the expenditure restraint initiative recently announced by the President of the Treasury Board.

I'll do my best to answer your questions when I have completed these brief opening remarks.

The President of Treasury Board has announced measures to reduce federal spending by one billion dollars. Every department and agency, including PWGSC, has been asked to contribute to this savings target. Our department's contribution totals approximately 47 million dollars. These savings will be allocated to support the government's priorities.

PWGSC's contributions have been earmarked from three areas: the department's revolving fund surpluses, totalling $40 million; the real property investment fund, totalling $5 million; and the Canadian identity grants program of $2.4 million per year.

Let me provide some brief details on these, Madam Chair.

Surpluses in PWGSC's revolving funds result from good management practices. Through the continuation of these practices, surpluses in our revolving funds are likely to continue to accumulate, allowing us to take this reduction of $40 million at this time.

Under the expenditure review measures announced in 2005, PWGSC committed to gross savings of over $1 billion over a five-year period by better managing its portfolio of real property assets. To help the department achieve these savings, an investment fund of $100 million had been anticipated, resulting in net savings to the government of $925 million.

However, PWGSC did not seek the first $20 million of the funds that had been set aside for fiscal year 2005-06. By adjusting our priorities, the department can achieve its billion-dollar savings by reducing the size of the investment fund to $75 million through a reallocation of internal resources. Therefore, PWGSC is contributing an additional $5 million from the current investment to the Government of Canada's overall savings initiative.

Through the Canadian identity grants program, the government provided grants and contributions to Canadian groups and individuals to increase the understanding and appreciation of Canadian identity and to develop social awareness.

This program was administered by the former Communications Canada organization, which was integrated into PWGSC in April 2004. Since this program has been eliminated, we are in a position to contribute its annual budget of $2.4 million to the expenditure restraint initiative, in support of the government priorities.

PWGSC is leading the ongoing government-wide transformation of federal procurement and real property practices. In addition to achieving significant savings through this business transformation, our department is proud of its contribution to the Expenditure Restraint Initiative.

Madam Chair, members of the committee, I would welcome any questions you might ask.

[The Chair, Liberal, Diane Marleau]

Madame Charette.

[Janice Charette, Deputy Minister, Department of Human Resources and Social Development]

Merci, Madame la présidente. As the Deputy Minister of Human Resources and Social Development, it's my pleasure to appear before this committee. I'm joined today by my colleague Marie-Josée Thivierge, who's the ADM of the learning branch in the department.

To put my comments into perspective, I thought it would useful to start with our department's mandates, since Human Resources and Social Development is a relatively new department. It was created in February 2006 through the consolidation of the former departments of Human Resources and Skills Development and Social Development Canada for the objective of ensuring integrated policy development as well as improved delivery of programs and services.

Human Resources and Social Development Canada's mandate is to build a stronger and more competitive Canada by offering choices leading to a productive and satisfying life, while improving the quality of life of all Canadians. Thanks to our efforts, Canadians know how to access training and apprenticeship opportunities, to protect themselves and be productive in the workplace and to have effective union-management relations.

They can also count on our programs and our support at every important stage in their lives, from childhood to retirement. They receive from our partners, of which Service Canada is one, the services they need.

In fulfilling its mandate, the department counts on 24,000 employees in the National Capital Region and in all regions of the country, and of this number, 2,000 work for Service Canada.

HRSDC has planned expenditures of $7 billion to $9.7 billion this year, which are detailed in our reports on plans and priorities. The vast majority of these funds support the department's statutory programs. Approximately 95% of our budget goes directly to Canadians through benefits such as employment insurance, the Canada Pension Plan and old age security.

In addition to these long-standing programs, the department is responsible for implementing several new programs and initiatives, including the launch of the new universal child care benefit, the implementation of the new apprenticeship incentive grant, and the launch of a new federal-provincial-territorial program for older workers.

In budget 2006, the government promised to review programs to ensure that those programs focus on results and value for money and are consistent with government priorities and responsibilities. Following a review process, which the President of the Treasury Board has described, the government's decisions were announced in September by the Minister of Finance and the President of the Treasury Board.

The impact on HRSDC is a reduction in spending of $32 million in 2006-07, and by $75.5 million in 2007 and 2008. Let me detail for a moment the changes within HRSDC.

There will be a reduction of $13.8 million to grants and contributions under the social development partnership program over two years. The program will continue to invest over $60 million this year and next to work with national community-based non-profit organizations on supporting the needs of persons with disabilities, children, and families, including children in official language minority communities.

The adult learning, literacy and essential skills program will be better targeted on national priorities and reduced by $17.7 million over two years. Over the next two years, the department will still invest $81 million in adult learning, literacy, and essential skills under this program.

The investments under the youth employment strategy programs will be better targeted. Specifically, the summer career placements program will have its funding reduced by $55.4 million over two years. With the remaining budget of $124.6 million, this year and next, the program will focus on students who need help the most in finding summer employment.

The workplace skills strategy will be refocused and reduced by $17.6 million over two years, achieved through the termination of funding for the training centre infrastructure fund and the Workplace Partners Panel.

We will stop paying out a 3 million dollar grant to the Canadian Policy Research Networks as of 2007-08.

The policy research initiative that has recently been transferred to HRSDC will achieve efficiency savings of $300,000 over the next two years. It's important to note that statutory expenditures will not in any way be effected by these decisions.

These savings represent some fifty jobs within the department. However, no one will lose their job against his or her will.

My colleagues and myself will be pleased to answer your questions as best we can.

Thank you for your attention.

[The Chair, Liberal, Diane Marleau]

Merci.

We will now move on to the question and answer period. We'll start with Mr. Bains.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Thank you very much, Madam Chair.

I would like to thank all of you, all the departmental officials from Public Works, Treasury Board, and Human Resources for coming out today.

You can understand why it's important for us to meet today. On September 25, the budget cuts were announced by Treasury Board Secretariat. We met with the minister on October 17, and some of you accompanied the minister from Treasury Board. As you can imagine, we weren't entirely impressed with some of the responses because of the partisan nature to the dialogue that took place. In light of that, we want to understand the policy behind the decisions he made.

Today's purpose is very different for me and, I believe, for many of my colleagues here today. It's to really focus on the process of how things unfolded. That's where I will be putting my attention, not on the ideology behind the cuts, because I think that was clearly discussed last time. It's something that has been discussed in the public domain as well.

I want to make a small comment to the deputy minister for the Department of Human Resources. I do appreciate the opening remarks, but you mentioned quite a few numbers. If we had something in writing before, it would have really been useful. On a going-forward basis, that would be greatly appreciated.

Before I get into the process, my initial question is about value for money. The government has clearly indicated that there are certain programs that are not considered to have value for money. I think they estimated that to be around $265 million. Could you describe what in your various departments is considered not to be value for money? According to the initial remarks given by the human resources department, there was a long list of items: cutting money for literacy and youth employment and targeting that money, cutting the status of women programs, and other programs that were cut as well. I just want to understand, of those cuts, which ones are perceived to not be value for money?

Answer that question, please.

[David Moloney, Senior Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat]

Sure, I'll take an initial crack at that.

The news release on September 25 did identify a group of some 10 or 12 programs that have been reduced or eliminated for reasons of value for money. That total is $265.6 million. The definition given of value for money focused on programs that in the judgment of the government were not achieving their results or that could be refocused or targeted for improved effectiveness.

In terms of identifying such programs, to the maximum extent possible, we at the Treasury Board Secretariat, along with our colleagues in the other central agencies, relied on the formal program evaluations that departments themselves conduct each year. In particular, this was the grants and contributions program, but it was not limited to that. We actually maintain a database with some 700 program evaluations that have been conducted by departments. We assessed those results, and that was the basis of an initial round of advice to the president and minister.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

I'm sorry to interrupt, but what are the programs that add up to that $265 million? Could you name the programs that are considered not value for money?

[David Moloney]

Sure. Would you like me to list them all?

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Just the major ones, please.

[David Moloney]

In dollar terms, the largest item is from the Canada Revenue Agency and the Canada Border Services Agency--those two agencies--with the elimination of the visitors' rebate program, which over two years is $78.8 million. The second largest item, in HRSDC, is for $55.4 million over two years, under improved targeting of investments for youth employment.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

The $55.4 million is what I wanted to get to. That's the youth employment, I believe. I don't have the correct terminology. I'm just trying to make sure I have that here. If you would correct me, it's for the youth employment program?

[David Moloney]

Yes.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

So how was that perceived not to be good value for money? I wanted an understanding of that based on the guidelines you just articulated.

[Janice Charette]

Perhaps I can help. To support the decision to reduce the budget for the summer career placements, which is one of the streams within the youth employment strategy, the department is constantly analyzing Canada's labour market situation. We use a wide variety of tools, including the Labour Force Survey.

Overall labour market conditions are stronger than they have been for many years for young people, particularly in the summer. For example, in 2005 the economy generated 1.4 million new summer jobs, and in 2006 older students experienced their best August ever for summer employment. In fact, for the best three years, their employment rate was up to 72%, which was up 2.6 percentage points from the previous year. Among those who were employed, 70% were able to find full-time work.

In addition to this labour force information, we looked at evidence from the program in the past. We found that one-third of employers who received a wage subsidy through the program indicated they would have created some or all of the jobs anyway. In addition, we found that 30% of participating students could have found work without the program. So the decision was taken to retarget the program towards students who have real barriers to finding summer employment.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Do you believe the funding helped to provide additional jobs for youth, based on the data you just mentioned? Did the youth employment program improve the situation over the years? You said there was a percentage increase in youth employment jobs secured through this program. Was that an upward trend over the years?

[Janice Charette]

I'm saying that overall labour market conditions for youth were improving.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Do you think this was the driving factor? Did it play a role?

[Janice Charette]

There were approximately 46,687 students hired under summer career placements in 2005-06. Unless I miss my guess, that is a very small percentage of the students who found employment in that summer. A portion is related to summer career placement, but overall the marketing conditions have a much more powerful impact.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Fair enough.

With respect to potential cuts that are rejected, there are usually multiple proposals brought forth from various departments. Various things are examined. Could you describe some potential cuts that were looked into—areas in which cuts were considered but not made? Perhaps a minister might have rejected one proposal or another for some reason. Could you elaborate on this process?

[David Moloney]

I don't believe I'm in a position to describe any individual items that may have been discussed. That's in the nature of advice to ministers, and there was a cabinet committee process that reviewed the proposals. However, with respect to the overall process, I can tell you that we looked right across the government. The president met with more than 10 ministers. Every deputy minister met with either the secretary or the senior associate secretary of the Treasury Board. We identified areas where there was a potential for gains in efficiency or effectiveness. Consultations included ministers at the level of the President of the Treasury Board, other ministers, and a committee of cabinet. In every case, the priorities of the government acted as an extra screen.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Who else was consulted? Were MPs or other organizations directly affected by these cuts consulted?

[David Moloney]

The consultations I'm describing included ministers, deputy ministers, and cabinet discussions.