Government Operations Committee on May 11th, 2006

[Laura Danagher]

All of them are listed.

[David Moloney]

All of them are listed. Thanks.

So regarding the $5 million, I guess the only other point is that all capital spending is clearly captured in aggregate by department. It's a question again of whether it is dealt with separately in a capital vote. I'll ask my colleague if the $5 million has been adjusted recently.

[Laura Danagher]

The $5 million has been the threshold for as long as I can remember. For at least 10 to 15 years it has been set at that level. What you are going to see is that in any department, it's usually the agencies that have relatively small capital budgets. You're not going to set up a separate capital vote for them. But in their RPPs they disclose all of their capital expenditures, so there are mechanisms for them to disclose them; it's just a question of whether or not you're going to have a separate vote structure for the operating capital of the department listed there. As David indicated, the grants and contributions are fully listed.

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

I just wanted to make sure that somehow, someway, somewhere this was identified so that we can see if this happens once or 500 times, because there could be a cumulative effect. I'm not suggesting there is, but without knowing the mechanics of government necessarily, I just wanted to ensure that the process was transparent so that we could identify those.

My second point is that I'm concerned about the the definition of urgency in the vote 5 area. I noticed the Auditor General has concerns. You said our other house has concerns. We'll be having the Auditor General before this committee at some particular point to deal with this and other issues. I'd like your interpretation of her concerns.

[David Moloney]

We've tabled with the clerk a document that outlines to members the former wording of the vote and the new wording of the vote, as well as the guidelines. I'll ask my colleague to summarize, because she was the one who actually guided the vote wording change in response to this dialogue, which did go on for a couple of years.

[Laura Danagher]

With regard to the Auditor General, most of the concerns the Auditor General was expressing were regarding the use of Treasury Board vote 5 for grant payments. There was one in particular following 9/11, in which there was a grant payment that was made to Transport Canada to supplement the airlines' lost revenues. She questioned the fact that Treasury Board vote 5 was provided to Transport Canada and then Transport Canada provided the money to the airlines in question.

The Treasury Board policy was that because Transport Canada had the relationship with the airlines, they were the ones that should have made the payment. She actually didn't question the use of the vote 5 for urgency; she was just saying Treasury Board should have made the payment directly to the airlines. It's a grey area, and we just said Treasury Board doesn't have that relationship with the airlines; it's Transport Canada, and they should be administering the program because it's their mandate to do that. We have firmed up the vote wording considerably to make it very clear what we're using it for.

Regarding the question of urgency, I think in some cases the reason they were making the statement was that you'd have a budget announcement, and then two years later the money would flow because it hadn't been included in the main estimates and because all the normal executive approvals hadn't been in place, and then the department would finally come in, have the approval necessary, and seek vote 5. She would question then why it would be considered urgent, and at that point it was just a question of timing in terms of when the approvals came through.

Once the agreements were signed and the payment had to be made, it was deemed to be urgent. That sort of dialogue was going on. We have firmed up a lot in terms of the interpretation of the definition of urgency, to clarify a bit more on how we use vote 5 in those instances.

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

Maybe I can raise one other small point then. This really doesn't refer directly to estimates.

We've had various governments over many, many years plan a budget on a three-, five-, six- or ten-year basis with projects and plans and dreams or ideas. And we all wonder, with the changing circumstances in the world today, how can you go ten years down the road? Almost everything you do is based on a maximum two- or three-year cycle. Do you think it would be prudent for government to deal with all of their project plans and campaign proposals and government actions based on a similar two- to three-year cycle rather than simply going on with four-, five-, six-, and seven-year commitments?

[David Moloney]

If I had been in front of the committee some years ago, I would have felt obliged to answer that question.

I think I should limit my response to two points. One is to say that the current budget is a two-year framework. In terms of our responsibilities, for practical purposes, we seek the balance in terms of spending authority for one year; we inform Parliament through the reports on plans and priorities of the plans for three years.

Of course, if one looks from one set of RPPs to those that come 12 months later, in respect of year two and then year one, the plans will change, because a variety of things change. The challenge for any part of government, central agency planning or informing Parliament, is to provide both a perspective and a reliable action period.

[The Chair, Liberal, Diane Marleau]

Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you both for coming here today and helping those of us who are new members work our way through what seems to be a very complicated and difficult area.

There is something I'd like to get clear in my mind, and it was referred to in an earlier question. I appreciate from your presentation that government spending is a huge ship and that when a new government comes in it's very difficult to turn that around. As you've described, there's a real time lag and a whole process to go through with amending budgets and amending the spending for all of the various government departments.

My question is about laws that were passed by the previous government, spending that was allocated, and the oversight of Parliament for spending changes that the current government now intends to make. If money was previously authorized, does the current Parliament have input to change the spending if the current government decides it no longer wishes to continue to spend money in a particular area? What actually comes to Parliament versus what is just made by departmental changes and cuts to spending that we may not see? Can you describe what input we would have in that process?

[David Moloney]

I think the core instrument of input that Parliament would have would be in respect to the process of review of the detailed main estimates. Committees will undertake this now through the fall, since the reports on plans and priorities will be tabled in September--that is the plan. Then the full supply vote would take place in mid-December. Each of the standing committees will review main estimates for each of those 122 appropriation-dependent agencies.

I don't want to brief committee members on parliamentary procedure, but fundamentally there is a vote. Those votes come back to the House, so every item of spending that takes place will be voted on and Parliament expresses its approval or otherwise through those votes.

[Peggy Nash, NDP, Parkdale—High Park, ON]

So basically it's up to each committee to get into the nitty-gritty of the estimates that affect its program area and not necessarily in the purview of this committee to get into that level of detail.

[David Moloney]

I'll leave it to the chair to deal with the relationships among the committees.

[The Chair, Liberal, Diane Marleau]

My understanding is that as committees we are masters of what we do and we're free to ask whatever we like. We can go into detail and they will give us whatever authority they have in terms of that. We can also question the minister as to what his or her plans are. That kind of question is relevant and it's certainly possible.

Perhaps you need to understand the real process about how something is approved or not approved. The budget is basically a statement of policy for the future. From that, different departments will prepare submissions to cabinet. Cabinet will approve them or not, then after that they will do a submission to Treasury Board. So there's a real process before the money is actually allocated to a program.

Then there are other programs where there are standard amounts put aside. Madam Thibault mentioned the repair of wharves. Probably, and I don't know within which department, there might be an amount put aside to do repairs. I don't know, maybe they've stopped doing repairs completely, but these are the kinds of things you can ask about. I mean, is there any budget in that department to do anything of that magnitude? Maybe there's not, but those are the forms of questions.

It gets a little complicated to follow through the whole process, but in the end it's really quite simple: you get a budget, the budget basically states the intentions of the government; each minister who has something in that budget then has to prepare a submission to cabinet, probably cabinet committee and then full cabinet; from that point on, once it's approved, they have to actually build the program, if it's a new program. They would then go to Treasury Board and ask for an allocation and could be questioned on it--have you done the right thing and so on. Those are the broad lines of how it essentially works.

You can add to that, if you will, because you're on the other side of it. I was on one side of it and you were on the other side of it. That's a simplistic way of putting it, but it's fairly accurate. Am I correct?

[David Moloney]

That's quite complete, yes.

[The Chair, Liberal, Diane Marleau]

Thank you.

Now I'll go to Mr. Temelkovski.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you very much, Madam Chair. It's nice to see you in the chair. Congratulations.

I want to thank the department for coming out and briefing us.

When there are appropriations made to transfer money to provinces, to people, made by one government and subsequently the following government changes them, are there any provisions built in so that there would be a penalty paid? We understand some of the provinces, the people, can be developing programs that would be long term and subsequently have to change or alter them. What are some of the ways they would be compensated?

I understand we vote on it, but there may be things we don't know about.

[David Moloney]

The short answer is no, the estimates do not contemplate specific penalties. I think it's important to expand on that, in the sense that all of the major transfers to provinces or to individuals are in fact paid according to statutory authority. So any plan a government would have to change fundamentally those payments would need to come to Parliament, not through the estimates but through an actual bill, to change. The equalization program changed a few years ago, the CHST program changed into the CHTCST. Those require specific legislative changes and Parliament votes on those. For the purposes of the estimates on that two-thirds of spending, when you add in the $34 billion debt service, we are simply informing Parliament that past laws that it has passed are giving effect to that amount of spending.

Any other payments that might be made through a grant and contribution program, for example, must be listed to a specific payee or what we would call a class grant or contribution program. Again, Parliament will pay on that. A government that makes a decision to go to Parliament and make a change to no longer continue with a program or to add a program must take account of all consequences. Parliament reviews that, but the estimates build in no notion of penalties or compensation other than what a government might choose specifically as a policy decision to put in place.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you. I have in mind a specific program, the EnerGuide program. People went out and did some of their renovations across the country and have incurred expenses with the idea of receiving compensation on it, and to my understanding that program will be phased out. What can Canadians expect or how does the continuity of the program...? How is the government support to those people, once it's been made, stopped or broken?

[David Moloney]

Such circumstances essentially are case by case, and I believe the accountable minister would need to be asked, and the department in question, as to what their plans are for implementing any change that they do propose. There are no Treasury Board or estimates-based guidelines or rules or sums that would guide a specific choice. Ministers and cabinets need to take those decisions case by case.

[The Chair, Liberal, Diane Marleau]

If I can add something to that, my understanding is that if there is any kind of a contract already signed with an individual it will be honoured. Usually that's part of the phasing out. If there is such a thing, they would take that into account. Normally that's how the government operates: if they've got a contract with someone they will honour it but they would not sign any new ones. This would possibly be the way they would phase that out. They might set a date and say as of this date there's no more program. That's in the prerogative of the government and it's done through the budget process. But that's a little bit how it works, and even a new government will honour contracts that were signed by a previous government. I don't think they have the choice, unless they want to go to court, and they probably would lose. So that's essentially the process.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

If I could just follow up on Mr. Kramp's question on the $5 million, is that $5 million per year or is it for two years, the length of the estimate period?

[David Moloney]

These amounts are being voted. With those three exceptions of agencies, nothing is voted for more than one year. Any amount is just in respect of a year.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you.

[The Chair, Liberal, Diane Marleau]

We have one last questioner. I hope you'll have the time to deal with this.

Mr. Wallace.