Government Operations Committee on Nov. 2nd, 2006

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, Madam Chair.

Welcome to all of you. Thank you very much for coming here today and for giving us the opportunity to shed a little light on this subject.

Some people classify these as cuts, and I suppose there is some fact to that statement. But I think we also have to realize what they are at the same time. They're savings. These are not just arbitrary cuts and then the savings disappear into a black hole. What happens to that money, with the savings? If we achieve a billion dollars in savings, what happens to it? Is it just gone, lost?

Mr. Fonberg.

[Robert Fonberg]

I think the budget statement was very clear. That billion dollars became part of the $5.5 billion that the government reinvested in the priorities that it identified in the budget.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you very kindly.

I was listening very carefully when Mr. Moloney actually expanded on the definition of value for money. I appreciated that very much. I can recall when the President of the Treasury Board announced these different savings. He actually categorized four areas in which we would achieve savings. One was value for money, and another was unused funds, the third was efficiency, and the fourth was non-core programs.

I'm wondering if you could elaborate and expand upon those definitions as well, so that this committee can understand more thoroughly how the cuts are broad-based and how they can become more effective.

[David Moloney]

Certainly.

The news release itemized the specific detailed savings into four areas, as the member has just set out. In the order that they show in the table, the first of those is efficiency. A total of $256 million over two years was identified in terms of efficiencies, which were defined as follows: savings from streamlining or consolidation of activities or from operational or program efficiencies, as well as programs or services that can be provided or are being provided elsewhere. That was the first category...well, the second, in addition to value for money.

The category of what we call non-core programs, where the savings totalled $99.6 million over two years, was identified as programs or activities that do not meet the priorities of the federal government or Canadians.

The final category was referred to as unused funds, with a total of $379.6 million over two years. That was funding for programs that will not proceed, funds in excess of those required to achieve results, or funds not needed due to lower than anticipated take-up for those programs.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you.

In essence, then, of this billion dollars, basically almost 40% of it was simply dollars that were not being utilized effectively within the various programs. Is that correct?

[David Moloney]

You're not required, in fact.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

I'm going to relate a bit of personal experience. I've been in the commercial world for 30-some-odd years. One thing that I and many of the other million-plus small businesspeople across this country recognize is that in order to survive, prosper, grow, and provide benefits, both for community and staff, you have to control expenses. If you don't control expenses, you don't survive, regardless of your income.

Our government took a look at that in 2004-05. Under the previous government, spending increased by 14.5%. Well, 14.5% on a continuous basis is not sustainable. If we have an economy that's growing by 2% to 3%, give or take a little, and your expenses are going into double digits, that is not sustainable. At some point the services would have to suffer, unless there is solid management in place to deal with this. Is the business of government any different from the business practices of the small or large commercial sectors in this country?

[David Moloney]

Of course, the Minister of Finance is accountable for the overall level of spending. Our job is to ensure that the government is in a position to achieve its goals at the lowest possible cost, and that it has the information required to consider whether its goals remain relevant within the stated order of priorities. The government decides which results to pursue and at what cost. Our focus is on making the business of government efficient and effective.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

If this government takes a position that it has to control expenses to ensure that we have a viable long-term economy and deliver services to people, does it not sound prudent and reasonable that they would try to be efficient? Wouldn't they try to have value for money? Wouldn't they try to find a way to ensure that the spending is delivering definable results? Is that not real? Does that not sound normal? Does that not sound like good business practice?

[David Moloney]

I don't want to comment on good business practice. We think that good government is spending the taxpayer's dollar well.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Mr. Martin made a statement to the effect that he felt there should not be program review. I thought, my goodness, we shouldn't have program review? I can't imagine how we would not have program review. Thank goodness we have an expenditure review. Can you tell us more about that process? Is it yearly? Is it something that's mandated? Is it a wish list, or is it an internal activity that takes place on a routine basis?

[Robert Fonberg]

Under the government's expenditure management system, the government makes its decisions about where to allocate its resources. This ultimately shows up in the form of supply in the House. It is now under review. In the budget, the government laid out the principles that guide us. I'll quote, if I may: “The new expenditure management system will respect the following principles: government programs should focus on results and value for money; government programs must be consistent with federal responsibilities; programs that no longer serve the purpose for which they were created should be eliminated.”

The President of the Treasury Board was asked, through the vehicle of the budget, to do a review of that system. It is a system that would essentially allow for ongoing program review. In these principles, there is no explicit intent to cut or grow spending. Rather, as Mr. Moloney said, the intent is to make sure that all spending is done in a manner consistent with the principles.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Actually, it sounds almost overly simplistic, but it sounds like a strategy and/or a theory that could be applied to home, family, business, church, or community spending, and to all the different levels of government. It is just sound, everyday accountable principles of an accountable government.

I just want to bring this into perspective. I heard a figure today about the total spending of government. Did I hear $224 billion? Is that correct?

[Robert Fonberg]

That's correct.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

What was the total of the savings brought forward by this government initiative?

[Robert Fonberg]

It was $1 billion.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

That would be less than one half of 1%, whereas previously, of course, we were spending in excess of 14%.

I think I rest my case.

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Kramp.

Mr. Bains.

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

Madam Chair, I just want to pick up on the comments made by my Conservative colleague Mr. Kramp. We believe that program evaluation is very important to examine where efficiencies can be found, but you have to look at where the cuts were made. These are the cuts that Canadians see. I am going to give some highlights. Tell me what you see in this theme.

You see $5 million cut from the status of women; $10 million cut from volunteerism initiatives; $10 million from the elimination of the youth international internship program; $11 million from the elimination of the first nations and Inuit tobacco control strategy; $17.7 million from the literacy skills program; $55 million from the youth employment initiative; and $6 million from the court challenges program. These are just some of the cuts, where the bulk of the cuts were made.

There is a deep-rooted frustration. It is not the fact that cuts were made and efficiencies were found. That should always be an ongoing obsession with government--efficiencies should be found. But they seem to be targeted at certain groups, and that's where the frustration comes in. That's where the difficulty lies in explaining to our constituents why these particular groups were cut.

We understand these cuts were targeted at women, aboriginals, youth, and minorities, but what other items were on the list? I know the entire government was part of this exercise in examining cuts, but at the end of the day the list got smaller and smaller, and there were various components to it eventually, when the cuts were decided. What other areas were examined for potential cuts?

Was it continued cuts with the youth, women, or aboriginals, or were other areas examined? I think that's where the concern lies.

[Robert Fonberg]

Let me start, and then I'll turn it back over to Mr. Moloney.

I think, in fairness, if you have questions about specific cuts and a view of the specific cuts and where they may have had their origins, it's worth having the individual ministers in to actually talk about the specific cuts. I think the individual ministers would actually want to talk about their specific cuts.

I think Mr. Moloney started earlier by talking about how this was an exercise that looked very broadly across all of government, the full range of programming--obviously not statutory programming or the public debt charge program, but all direct program spending. For all intents and purposes, that was the universe of what was on the table when this began.

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

I know that was the universe, but look where we ended up. I understand the universe is very open, and I appreciate that. This is not a reflection on you in any way. I'm not pointing fingers at you. You guys are giving great answers in terms of doing your best. I don't want to put you on the spot. But you can sense the frustration.

The universe was all the departments across government, but at the end of the day women were targeted, youth were targeted, and the court challenges program. Those were the areas that were targeted, and there seems to be a theme there.

I'm going to rephrase the question. Can you indicate if there were other areas that were looked at for cuts as well, aside from the cuts we see here before us?

[Robert Fonberg]

Let me just start by saying that if you have a view, or if the committee shares the view that there was targeting, that's a view the committee has, that individual deputies or members actually have.

We looked again across the full range of business-related activities, the full range of international activities. This is a very wide perspective. I don't think we could comment on any issue of targeting. We can explain the process of how we got from there to here, including consultations that went on between the secretariat and deputies, the president, ministers, and the cabinet process. But in terms of the winnowing of the list, at the end of the day those were political decisions.

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

No, I understand that. That's why I said I don't want to politicize this. I'm not here to discuss policy; I just want to focus on the process.

You alluded to this earlier as well, that typically there are consultations that take place when cuts are made, that stakeholders are usually—you said “typically” is the word you used.... Maybe we can check this out. Typically consultations are made—I don't want to put words in your mouth—when cuts are made.

My view is that these particular organizations or groups were targeted and were not consulted, based on our understanding, because it was a cabinet exercise. Based on what Mr. Moloney said, even MPs were not consulted. Is that correct, first of all?

Okay, so MPs were not consulted; the stakeholders were not consulted; it was strictly a cabinet exercise. It was a top-down approach. People at the bottom were not consulted. Is that a fair assessment?

[Robert Fonberg]

People at the bottom of...?

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

The people who are actually affected by the programs. Were people who administer the programs, people who have an intimate knowledge of the programs, people who can explain and justify the impact of the programs, consulted?