Government Operations Committee on May 11th, 2006

[Mike Wallace, Conservative, Burlington, ON]

I have two more little questions.

Do we separate capital from current? I was looking at the special warrants book. There were capital projects and operating projects. Do we have guidelines for how much we can spend on capital compared to operating? Does that happen?

[David Moloney]

We have very strict guidelines in terms of the accounting. The government shifted its method of accounting a few years ago to accrual accounting so that we are in a position where the government collectively needs to inform Parliament on an accrual basis.

In the case of a capital expenditure, in the year the capital expenditure is made, we seek the full amount from Parliament. So for a $500-million asset purchase--that's a little large, a $50-million one might be more typical--we seek the $50-million spending authority. We, however, report on the impact on the government's financial position through the life of the asset according to accrual accounting methods. We need to do it both ways.

We are studying the extent to which we can better inform Parliament through the estimates, at a very detailed level, of both the accrual and the cash basis.

Right now, the budget is on accrual. The estimates are on modified accrual. That's one of our objectives for improved reporting to Parliament, to be able to give both kinds of information at a detailed level, without confusing parliamentarians.

[Mike Wallace, Conservative, Burlington, ON]

My final question actually relates to special warrants. If we had fixed election dates, would it help the planning process for the financial operations of the government?

[David Moloney]

It would depend very importantly on how the fixed election date then fell within the fiscal year. If an election were to take place early in a new fiscal year and the government of the day had been in a position to get either extended interim supply, as happened in 2004-05, or had full supply, as has happened in some other years, you would have little to no need for special warrants.

There were no special warrants in the case of 2004-05 because of the timing of the election. In most general elections, however, there is need for some use of special warrants with the elections just wherever they are through the year. This year was particularly challenging, of course, because we fell across two fiscal years. It had been about twenty years since the previous time we needed to seek Governor General special warrants to open a fiscal year. That's a rare occurrence.

[The Chair, Liberal, Diane Marleau]

Thank you very much for coming.

I hope this was enlightening for you. Thank you very much.

[David Moloney]

Thank you. Thanks for the questions.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I thought that Mr. Moloney would give us some information about the Governor General's warrants.

[The Chair, Liberal, Diane Marleau]

I'd forgotten.

Before you leave, would you talk about the special warrants, how they're exercised, and so on?

[David Moloney]

Certainly.

The summary of the procedure is the following: when we talk about a normal supply bill—once Parliament approves it in respect to becoming an appropriations act—after it's passed, the government goes to the Governor General with a warrant to be signed, on the basis of Parliament's approval of an appropriations act.

So all spending is authorized by the Governor General through a warrant. What's special about the period we've been through is the government, having the authority under the Financial Administration Act, which was narrowed quite considerably through amendments in 1997.... The special warrant gives the Governor General the legal authority to approve spending only when Parliament is dissolved for the purposes of a general election, and it's a warrant that could be requested no more than 60 days after the writs are returned and that could then run for a specific period of time.

In those circumstances, the Governor General, under the Financial Administration Act, has the legal authority to sign a special warrant—special, in a sense that Parliament had not approved the spending. The Financial Administration Act provides that two steps are required--that the Governor in Council issue an order in council asking the Governor General to sign a special warrant, if and only if two steps are taken.

One is that a minister responsible and accountable for specific spending issues a warrant in writing to the Governor in Council that the spending is urgently required for the public good. The minister is individually and personally accountable for that attestation, which is formally provided to the Governor in Council.

A second and separate attestation is required of the President of the Treasury Board, who needs to attest that there is no other appropriations authority that Parliament has previously granted that could be used.

So what that means in practical terms is that as we go into a period of general election, the only amount of money that is not encumbered by Parliament for a specific use is TB vote 5. So we do not go to the Governor in Council without running down TB vote 5.

In the report we tabled, we documented how we went to the Treasury Board and proposed the use of TB vote 5 to meet the initial, urgently required needs. The Treasury Board Secretariat—and again, this is one of Ms. Danagher's responsibilities—has to work with every single department coming forward with a need to ensure that there is no amount within the vote in question that cannot be reallocated from the plan purpose. So substantial reallocations do in fact take place. However, because Parliament has voted amounts vote by vote, and Parliament is not sitting, we cannot move money between the votes.

So the President of the Treasury Board attests that there is no central vote authorization and that there is no amount that's available and cannot be used otherwise inside each vote. Then an order in council is released, gazetted within a fixed period afterwards, and the Governor General has that authority. The 1997 amendments require that the government then table the report in Parliament once it returns.

I think that's the end to end.

[The Chair, Liberal, Diane Marleau]

Mrs. Thibault, you have the floor.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I have only one question.

You said that it would have to be urgent and that there should be no other spending authority.

If I understand correctly, when you decide to use vote 5, it is on a first-come, first-served basis. The departments would submit their requests without any strategic planning. This would be the case, for example, if you decided to give that money to National Defence or to the RCMP for security reasons. All, to take another example, the government could decide to improve the benefits paid to low-income Canadians, as a welfare policy. So, it would be first-come, first-served.

About the Governor General's special warrants, is the spending authority given in the same manner or is there some strategic planning? We're talking here about a rather significant amount, about 16 billion $, which is more than pocket change. How would it be done?

[David Moloney]

There is no limit as such. It is not really a first-come, first-served system since there isn't really any limit.

If I am not mistaken, the 15 billion $ amount is distributed as follows : 4 billion $ spent in the 2005-2006 fiscal year, and another 11.5 billion $ to start the current fiscal year. When there is an election, the appropriation of vote 5 is not important anymore. We appropriate the money without any prioritization.

We have an overall amount and various requests. We must appropriate the amount. We have done that in order to minimize the number of attestations that would be required. Some of the requests were for minimal amounts. Then, we used vote 5. However, there is no limit and there is no obligation to inform Parliament afterwards.

[The Chair, Liberal, Diane Marleau]

Do you want to ask a question?

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you.

Thank you for the great presentation. I'm about 3% more informed now than I was, which was minus 10%.

[David Moloney]

I hope my performance pay is not affected.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

No, I mean it's a steep learning curve.

You mentioned that ministers request, if I understood you correctly, and then they go to the Treasury Board. During the period of an election, is it the previous minister who carries on that responsibility, even though the election has been called?

[David Moloney]

All bodies of cabinet, including Treasury Board, continue as long as a government continues. Obviously, governments are bound to govern themselves somewhat differently, so it is certainly the case that Treasury Board looked to exercise urgently required business, in terms of approving spending, particularly in a context that there's no vehicle--in respect of last fiscal year, certainly--to proceed with spending if it was new spending, other than through warrants. So the test of urgently required for the public good would obviously be a guide to Treasury Board, not only to the individual minister.

However, until a new government is sworn in, for purposes of emergencies or any other needs, the sitting government has full legal powers.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you.

[The Chair, Liberal, Diane Marleau]

Ms. Nash.

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

In terms of reviewing the actual expenditures, does it simply go through the government operations committee, five to seven months afterwards? Is that how the accountability of that money is reviewed?

[David Moloney]

I believe the public accounts committee will typically have a role, in terms of reviewing what we call the public accounts of Canada. Again, individual standing committees will receive the departmental performance reports, which will contain the same information plus quite a bit more in terms of explanation and performance reporting. So, again, it's within the committee's purview to choose to call the minister to review those reports, or not. We provide them to Parliament for Parliament's use.

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

But our committee would be able to determine, I suppose, how that $15 billion broke down between departments or between ministries, then. That is information, I suppose, we could request here.

[David Moloney]

Actually, the President of the Treasury Board tabled in Parliament a very detailed document that gives quite a bit of detail. Of course, if further detail is requested by the committee, we'll be happy to provide it to the extent we can.

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

Thank you.

[The Chair, Liberal, Diane Marleau]

Thank you.