Government Operations Committee on May 14th, 2009

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you very much.

Thank you very much, both of you, for being here today and understanding that we only just received these, so our questions may not be as detailed as we would like.

I have a quick question on the budget implementation initiatives under vote 35. Thank you for pointing out the specific pages of where they are. I note that there's a total of approximately $1.187 billion of that--

[Alister Smith]

It is $1.8 billion.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I'm sorry, that's the total, but the balance was $1.1 billion. So it is $1.8 billion.

Of these moneys, if you can clarify for me the process, how much has been allocated as opposed to spent? I look at different departments--Environment, Parks Canada, some aspects under HRSDC, and Natural Resources. There are obviously a number of departments in which an amount of money has been allocated.

We've had this discussion at a number of other committee meetings, and I appreciate again your patience with us. The reason the Liberals in opposition approved this vote 35, despite the lack of upfront knowledge about where it would go, was for the purpose of allowing money to flow as quickly as possible. Can you explain to me how much of this $1.8 billion has actually flowed to the departments? Can you speak to the direct linkage, if any, in terms of money spent through these immediate allocations and the actual creation of jobs at this point in time?

[Alister Smith]

There are several questions there, and I'll try to address them all.

Virtually all the funding here has been allocated to departments, so what was allocated in the central vote is now with departments.

How much is spent, of course, depends on the program or initiative. There is work under way on many of these initiatives, and indeed, funding is flowing. We are trying to assess, on an ongoing basis, and certainly for the June reports and other reports, precisely how much money is flowing. But the first issue here was to ensure that the funding was allocated so that there would be no blockages for municipalities or provinces and others involved because we had a very rigid supplementary estimates (A) schedule. I think we've overcome that; bridge funding has been provided.

I can give you a couple of examples, if you like. If you turn to the allocations, about 35 allocations, on page 77, for Parks Canada for the Trans-Canada Highway, work is under way there. On the Strategic Training and Transition Fund, agreements have been signed with three provinces--full agreements--and there are nine agreements in principle with others.

For the marquee tourism events, funds are flowing to individual marquee festivals. For the NRC industrial research assistance program, or IRAP, they are hiring graduate students and assistants. For Public Works infrastructure projects, contracts have been issued and work is under way on many individual projects. Work is under way on the bridges, as Mr. Baird mentioned. For Revenue Canada, this funding has assisted in the implementation of the budget tax measures. Knowledge infrastructure program agreements have been signed with B.C. and Nova Scotia, and projects have been identified.

There's a whole range of different states of progress on all these initiatives. But funds are flowing and progress is being made.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you.

In the last few days, there have been significant media reports about the Auditor General's report, which highlighted, in particular, challenges to a number of bridges in the province of Quebec. In the Auditor General's report, she made quite specific recommendations for funding. Without having a chance to look through the supplementary estimates here, but recalling that in the reports I certainly heard that representatives from the government had committed to, in fact, implementing all the AG's recommendations, is that the case? Is there anything in here, and if not, will we see that in a future commitment?

[Alister Smith]

Certainly there's funding under Public Works to repair a number of bridges, at least four federal bridges, including two in this area: the Burlington Canal Lift Bridge and a fourth bridge. I know that there's also funding here under Transport for the Champlain Bridge, which is Canada's largest and busiest bridge, in Montreal.

So indeed, this funding is flowing for the purposes of the bridge work.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Do you know offhand if these supplementary estimates actually cover what the Auditor General is recommending, or if revisions will have to be made? Will additional moneys have to be committed in order for the government...? As I understood, they acknowledged the AG's recommendation and said we will do this. Will money have to be added?

I just have not had the chance to look to make the comparison. Do you know?

[Alister Smith]

No, that I don't know for sure without reading that chapter of her report to see whether all of the recommendations would be met with these investments. Clearly, they're meeting some of the needs that she identified in her report.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Now I'm going to be relying on you. Is there anything in the supplementary estimates that you can highlight for us that is out of the norm, as we take them home for bedtime reading? We will be sure to find more, but is there anything? We know about vote 35. But is there anything here that you would recommend we focus on, or is there something out of the norm that you can highlight?

[Alister Smith]

I don't think there's anything that's really out of the norm.

Due diligence has been applied to these allocations to the TB vote 35 in the same way as applied to the supplementary estimates (A) allocations. We have very good assistance from departments in ensuring that the costs they provide us are bona fide. Their chief financial officers attest to those numbers.

Our responsibility is to ensure that the program's terms and conditions are appropriate and the initiatives are properly funded according to the budget and within the budget confines. Once the program is in operation, the operational aspects of that program are very much with the department and with the provinces and municipalities.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Do I have any time left?

[The Chair, Liberal, Derek Lee]

No, we're at exactly eight minutes now.

I'm sorry. I'm going to Madame Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Mr. Chairman.

Good afternoon, Mr. Smith and Mr. Pagan. Thank you for being here again this morning. We ask you to testify often, and your answers are extremely important for us.

Mr. Smith, when you came to see us last time, we asked a lot of questions about the speed with which the stimulus package was being implemented. We were wondering whether there might be some slippage in the allocation of funding to specific projects.

You've just told us that funding is currently in the hands of the departments. Were you able to guarantee us that the departments were not going off track?

[Alister Smith]

The funding is provided to departments for these initiatives. They're responsible for implementing the initiatives under the terms and conditions of their programs. They have deputy heads as accounting officers who are responsible. Mr. Martin, in particular, who had a great deal to do with the Federal Accountability Act, will know all of these features. Deputy heads as accounting officers have the responsibility to ensure that funds are properly used.

We ourselves are gathering information from departments for the use of the quarterly reports to try to ensure that, in fact, funds are being used for the initiatives for which they've been allocated. In terms of slippage, I think maybe your question is a broader question. Some programs will go faster than others, and sometimes negotiations with provinces and municipalities will occur faster than others, as Hon. John Bairdsaid.

So it's hard to generalize. But I think so far, so good. I think this stimulus package is off to a good start.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you.

In your opening statement, you said: “The Supplementary Estimates also provide information on a $50 million non-budgetary initiative for CHMC's Insured Mortgage Purchase designed to stimulate housing construction.”

When a person who does not have a lot of money does business with CHMC for his mortgage, he always pays more. CHMC is more expensive than a bank or a caisse populaire.

What is an insured mortgage purchase program? If people have a loan at 6.5%, can they renegotiate their rate with CHMC? Could CHMC grant them a loan at the current market rate, which is approximately 1.95%?

[Alister Smith]

They can't do it that directly. The funding here is provided for buying back, if you wish, bundles of mortgage-backed securities, which allows the banks to then lend more money at lower rates to Canadians. And therefore, through that, indirectly it would reduce borrowing costs for Canadians. But it's really to buy back, through this mortgage purchase program, mortgage-backed securities to ensure that the banks can continue to lend at the rates--

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

So this program is for banks and not for individuals.

[Alister Smith]

It's also intended for individuals.

It's just that it's indirect. If the banks were blocked in lending and didn't want to take on additional mortgages, that would be a big problem for ordinary Canadians who were trying to get mortgages. So this takes some of those mortgages off the books of the banks, and indeed it's been a relatively successful initiative as part of the extraordinary financing framework.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

You'll understand why I'm very skeptical about this program, which I think is window-dressing. Ultimately, if you want to renegotiate your mortgage with a bank, according to your mortgage contract, you can pay a three-month penalty or the bank can also not want to reopen your mortgage, and so on.

I know that you're not the person responsible, but I'm questioning this program, which helps the banks but not the individual homeowner. It's part of CHMC's mission to help individual homeowners, among others.

On page 80 of the Supplementary Estimates, at Industry Canada, under “National Research Council of Canada”, reference is made to the Industrial Research Assistance Program, the IRAP, about which it states: “To proceed immediately with the implementation of expansion measures [...],” to assist small and medium-size enterprises.

Have any funds already been released? Have you received any requests? Have any steps been taken to make this program work for SMEs?

[Alister Smith]

What I know so far is that funds are flowing through this program, and that they are hiring graduate students--assistants--for the program. So things are under way. I don't know to what extent that's occurring. We are gathering that information now from departments and agencies, but I believe that one is under way.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I don't understand why students are being hired. This is about direct financial assistance to small and medium-size enterprises.

[Alister Smith]

The way this program works is through contributions by NRC IRAP for research and development in small and medium-size enterprises. So these are firms of up to 500 employees. Essentially the contributions are provided to them so they can hire graduates holding advanced or specialized degrees to work on technology development projects. That's the way it works.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Perfect, thank you.

Thank you, Mr. Chairman.

[The Chair, Liberal, Derek Lee]

Merci.

We'll have Mr. Anders for an eight-minute round.

[Rob Anders, Conservative, Calgary West, AB]

I'm not sure if I'll take up my full eight minutes, Mr. Chair, so maybe one of my colleagues ought to be prepared just in case.

I have a couple of questions I'm intrigued by, although I'm not sure if they'll pertain totally to small and medium enterprises. On page 115, there is an expenditure there that could be in thousands of dollars, although I would be shocked if that were the case, because the amount listed is $99,550,000. It's for contributions to the Canadian Television Fund.

I guess I'll ask a series of questions. What exactly are we getting for $99 million, or just short of $100 million, for the Canadian Television Fund?

Another question I have goes back to page 49, where we have $142,520,208 for the Canadian International Development Agency. There, I guess one of the questions that comes to the top of my mind is in regard to a young man I remember from when I was chair of the veterans affairs committee. He had lost his leg to an improvised explosive device in Afghanistan, and he was looking for about $135,000 for the replacement of one limb and a portion of the other. I wonder if we divided $142,520,208 by $135,000, how many limbs that would buy, because he still hadn't received that funding.

I'm also intrigued by page 163 dealing with Industry Canada, where we originally had close to $637 million allocated for grants. That amount went up by another $85 million, or close to $86 million, for a grand total of close to $723 million in grants.

I'm intrigued why there are so many more grants in Industry Canada.

Those are my three questions off the top.