Government Operations Committee on Dec. 2nd, 2010

[Alister Smith]

I'll start, and then perhaps my colleague may want to add some points as well.

We do challenge when new policy measures are being introduced and have gone through cabinet but come to the Treasury Board. We scrutinize those measures on a couple of bases: one, that they're consistent with our policies, whether that's a procurement policy or any number of Treasury Board policies; and also, that the funding that's being requested is appropriate for that particular policy initiative. We need to check often with the Department of Finance to ensure that the funding is in place, that there is a source of funds for the initiative. We put a fair amount of due diligence into all of these issues as they come before Treasury Board.

Subsequently, and even after they have become part of a department's reference level and they are ongoing, we provide continuing scrutiny; we are continually looking at whether in fact programs are effective, whether there's value for money in them. We require departments to establish performance measures for the programs. We ask them to report on performance. So we ask not just in their planning documents but also in their performance reports to tell us how the programs are working. Then we scrutinize them even more thoroughly and in great depth through strategic reviews.

Those are some of the ways in which we exercise a challenge function. Maybe my colleague might have other comments.

[David Enns, Deputy Assistant Secretary, Expenditure Management, Treasury Board Secretariat]

Thank you.

When we do receive submissions, in addition to the process that Alister has described, we will look at things like the department's management accountability framework assessments, which assess departments on aspects of their management capacity on an annual basis. That will form part of our routine analysis of a departmental submission.

We'll also look at audit and evaluation findings for related or like initiatives in any given area for a department, all with a view to determining whether the department has in fact the capacity to deliver on the program initiative that the submission is describing, but also to make sure that the delivery mechanisms chosen and the funding associated with them are at the right level.

[Chris Warkentin, Conservative, Peace River, AB]

I think, generally, you have answered my next question, but I'd like some additional clarity.

It seems to me that in government, as in many large organizations, there is an isolation effect or a silo effect that happens from one department to another. Oftentimes there are things that are being undertaken in one department that are being duplicated or being done in a less efficient manner in another department. Is there any responsibility within the challenge function, within your responsibilities in your office, to look at better management practices? And would it require an actual policy? Or maybe there is a policy within Treasury Board that says there needs to be a breakdown of the silo effect, a breakdown of the isolation effect, and collaboration between departments that are going to create better efficiencies and possibly better outcomes for the taxpayers. Is there a policy that you're bound by within your respective offices?

[Alister Smith]

That's an interesting question. I'll see if I can address it in part.

We have a good system, I think, within the federal government of requiring departments to show their spending by program, with the objectives intended to be achieved through those programs. We have a policy requiring that of departments. When you look at program activity architecture in our main estimates, or in some of the other documents we provide, and the allocation of resources in departments, you can see that all this follows a structure, a discipline, in which a department has to explain the outcomes it's trying to achieve. Each department has to provide performance measures and evaluate whether it is achieving the objectives it set out to achieve with the money it was given.

With that discipline, you can pick up on some of the duplication that exists horizontally in government. Indeed, there are a lot of programs that look quite similar, but that may be focused on slightly different objectives or stakeholders. Over time, there is a need—and I agree there is always a need—for us to look at ways in which we can avoid duplication and try to work better horizontally.

Strategic reviews get at some of that. They require departments to go all the way through the program activity architecture and justify the programs. Indeed, all the information we developed through the strategic review process can help us look at areas of duplication and perhaps address them in future.

We have some mechanisms in place, but they aren't at the point where we say to a department that such-and-such a program is a duplicate and it must be eliminated.

I don't think those programs would survive for long if they were truly duplicative. Eventually, we will see them and departments will try to streamline them. It's an ongoing challenge.

[Chris Warkentin, Conservative, Peace River, AB]

I'm not even thinking of programs that duplicate other programs. I guess what I'm seeing is where there is a government office in our local community that is undertaking a certain responsibility...often my constituents will ask, why can't that office undertake what is a similar type of activity for a different department, whereas now we have to go to a different location or a different city to be served?

I'm wondering if there's any effort or policy within Treasury Board to tell departments to have.... We have Service Canada, but often that isn't collective enough, and often policy challenges reduce the effectiveness of the collaboration. I'm wondering if there is any encouragement by Treasury Board to collaborate on policies.

[The Chair, Liberal, John McKay]

Mr. Smith, be brief. Our time has run out.

[Alister Smith]

The budget also kicked off an administrative services review, which will be looking at duplication in the back office and the potential for consolidation of some government services. Service Canada is a good example of how we have moved a long way to avoid duplication in the infrastructure serving Canadians. But that's also an ongoing challenge.

[The Chair, Liberal, John McKay]

Thank you, Mr. Warkentin and Mr. Smith.

Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Chair.

Let me just say at the outset, Mr. Smith, as I sit here and listen to my colleagues questioning, that I find the whole estimates process incomprehensible. I'm the vice-chair of the government operations and estimates committee, and you could tell us anything. You could sit there and tell us anything, and we could try to write questions that sounded like we understood you, but we really don't.

[Voices]

Oh, oh!

[Pat Martin, NDP, Winnipeg Centre, MB]

We're at your mercy. I didn't even bring the supplementary estimates with me because they're too heavy for my staff to carry, much less plow through them all.

It's just ridiculous. You come to us saying you're seeking Parliament's authority to spend $4.4 billion. It's really that you're seeking Parliament's “permission”. We're supposed to grant you “permission” to spend that money, to put it in the right context. It's my goal to dumb down the estimates process, and fortunately I'm very qualified to do that, at least.

Let me start with what almost seems like a contradiction in what your testimony is today.

In one paragraph of your report you're seeking Parliament's permission to spend $4.4 billion, but you're also saying that this pile of supplementary estimates is announcing a decrease of statutory spending in the amount of $2 billion. I guess this is why we put in place the Parliamentary Budget Officer, to help ordinary mortals like us wade through an incomprehensible system of estimates.

In that context, let me ask my first question. We ask the Parliamentary Budget Officer to help us at least understand the budgetary freezes, the impact of the departmental freezes. He will testify later, I suppose. But from what I understand, they ask the government how they intend to achieve their planned operating budget freeze over the projected period. But the government indicated that this information is a cabinet confidence and will not be released to the public. We should put it into context first. The Parliamentary Budget Officer is not the public; he is our agent. He's the guy we commissioned for a specific task to help us understand what the hell is going on. It disappoints me that the door is slammed in his face when he asks the very question that we put to him.

In fact, the standing committee has put the very same question to the government, and it's currently being assessed as to whether the government will tell Parliament how they intend to achieve its planned operating budget freeze. Is what you bring us today the manifestation of that request? Or are we still waiting for that request?

[Alister Smith]

There are two things we need to distinguish. One is the operating budget freeze and how it works, and we're happy to engage on that, as we have been. But there is also the data request that the Parliamentary Budget Officer has made last year and this year, and that the committee has made, and we have just responded to the committee on that.

The issue for us on the Treasury Board side is in not being able to release documents or data, which our lawyers tell us are a cabinet confidence, because ministers have not made a decision on or approved a particular item.

[Pat Martin, NDP, Winnipeg Centre, MB]

How can we have lawyers standing in-between Parliament and the government that we give permission to spend our money? If the public hasn't got a right to know, surely Parliament has a right to know what government is doing with the money that we give them permission to spend, through the estimates process.

[Alister Smith]

It's really the matter of cabinet confidences, and that's information we cannot share. If an item is before Treasury Board or cabinet, and it's subject to a confidence, it cannot be shared. That's also the law. So that is the reason that some information that has been requested by a PBO cannot be provided. We have provided everything we could provide.

[Pat Martin, NDP, Winnipeg Centre, MB]

The very same question was put to government by this parliamentary committee. First of all, the Parliamentary Budget Officer is an extension of Parliament; he is an agent of Parliament, so he's asking on behalf of Parliament. He's not going to have a press conference and release this information necessarily.

I think we've identified a very serious problem again in the estimates process, because government seems to have the right to rack up $58 billion deficits, but we don't have a right to know how we plan to dig ourselves out of this hole, except for some very sketchy information. It's my concern that they will try to balance the books on ideological grounds, that the choices they make.... I mean, it's like 007 for that Minister of Finance. It's like a licence to kill, because he now has a deficit to slay, and he can cut and hack and slash at every program that he disagrees with ideologically. The sketchy information we have now is that the biggest cut, the largest single cut, in this effort to reduce their growth in government spending is the Canadian Broadcasting Corporation, by a percentage at least. They're getting 1.3% of their budget cut. It's not frozen for three years; it's reduced.

Then the National Parole Board is the third highest. Statistics Canada, who we know they have no respect for, is feeling the brunt in the top ten reductions.

We're not getting enough information to accurately access the veracity of the plan, the business plan, and what little information does trickle out gives us cause for concern that they're going to be balancing the books again along ideological grounds, Mr. Smith.

I know that's not your fault, and I appreciate all the work that you do, but we're really.... I know I'm supposed to be asking you questions and not going on talking here, but let me understand this. When you say—or when the government says—they're seeking a 5% reduction, that's not really a reduction, is it? That's a reduction in the growth. The growth rate for the five years before the economic action plan was about 6.4% per year. Does that figure sound right, now?

[Alister Smith]

When you refer to the 5%, I think you're referring to strategic reviews.

[Pat Martin, NDP, Winnipeg Centre, MB]

The program review that's under way, I believe, that they're seeking to reduce.

[Alister Smith]

Right. Those are for about one quarter, roughly, of departmental spending each year. Departments have to come forward with their lowest-performing, least effective 5% and propose reallocations or reductions in that spending.

Now, I think what you were referring to earlier was the document from PBO on monitoring the operating budget freeze. That has some other numbers in it, and those numbers are—I believe, and they will correct me, I'm sure—the numbers that apply simply to the 1.5% wage--

[The Chair, Liberal, John McKay]

Thank you, Mr. Martin. I'm sorry to interrupt. Unfortunately, your eight minutes is up.

Mr. Regan, do you have similar confessions to make for five minutes?

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chair.

I think Mr. Martin's comments were pretty accurate. For most of us it is a very challenging process. You have copious amounts of information you try to sort through and figure out what it all means, and then try to hold government to account in relation to that. There's no question it would be nice if it could be simpler in some way, but the important thing for us is to dig through it and ask you the questions that we can.

This notion that future expenditures are restricted to cabinet confidence, which Mr. Martin is raising, is very disturbing. It seems to me that if the government is saying it's going to freeze certain things but doesn't want to tell us what they are, that's not very transparent. It's telling us it can manage all this. It can balance the books over the next six or seven years and finally get rid of the deficit it has created, but it's not going to tell us how because it tells us that the way it's going to do it and what it's going to freeze is a question of cabinet confidence--you don't need to know, don't worry about it--and that's very disturbing.

Let me turn to the question of the contingency allocation, from which $318 million is being transferred for what's called “miscellaneous, urgent or unforeseen expenditures”. Now, if I recall correctly, the contingency allocation was $1 billion. It is in that range in the 2010 budget. Is that correct? If so, it's about a third of a percent of the overall budget of $280 billion. Is that right?

[Alister Smith]

Sorry. The $318 million refers to what exactly?

[Geoff Regan, Liberal, Halifax West, NS]

In vote 5, you've got a transfer of $318.3 million from Treasury Board's government contingency allocation to the relevant departments in terms of “miscellaneous, urgent or unforeseen expenditures”.

[Alister Smith]

Vote 5, yes.

[Geoff Regan, Liberal, Halifax West, NS]

It almost seems like it used to be a contingency reserve of 3% and that's been reduced to .3%, and the government is already dipping into that to the tune of one-third of it, $300 million. It sure doesn't leave much confidence in terms of a cushion to ensure that the government meets its fiscal target in the current year.

[Alister Smith]

I would mention that this contingency vote, Treasury Board vote 5, is a $750 million vote that is replenished. It's like a credit card, in a sense. It's an advance for departments that require it for unforeseen needs. It gives them the cash to manage in the short term and to replenish the contingency fund at the next supplementary estimates. Each time you use $318 million, that will be replenished. It's really just a short-term advance. The overall amount of $750 million may not be large enough in the future as government grows and we may need to increase that contingency fund, but so far it's been enough.