Evidence of meeting #41 for Government Operations and Estimates in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was departments.
A recording is available from Parliament.
Associate Secretary, Treasury Board Secretariat
There may be some other costs in there, too, for the operations of the other offices, but that's primarily it, as far as we know.
Liberal
The Chair Liberal John McKay
Thank you, Mr. Smith and Mr. Enns, on behalf of the committee.
There are a lot of moving parts here, and we appreciate your contribution to helping us understand those moving parts.
Colleagues, I'm going to suspend for a moment, while Mr. Smith and Mr. Enns leave the table, and we will invite the Parliamentary Budget Officer and his staff to come forward.
Liberal
The Chair Liberal John McKay
I'm going to reconvene this meeting. I welcome Mr. Page, Mr. Khan, and Mr. Weltman to the committee. All of them are familiar with our committee process.
Before I invite Mr. Page to make his presentation, colleagues, the clerk has informed me we will not have our usual time pressure because there will not be a committee coming in behind our committee. So we do have a bit of flexibility.
Liberal
The Chair Liberal John McKay
I had anticipated, colleagues, that we would have a subcommittee meeting after this, and we may not have to move out of this room. I just bring that to colleagues' attention while we're asking questions of Mr. Page and his colleagues.
Without further ado, may I ask Mr. Page to make his presentation. Thank you.
Kevin Page Parliamentary Budget Officer, Library of Parliament
Good morning. I appreciate the opportunity to appear before you today in support of the committee’s on-going studies into the Infrastructure Stimulus Fund (ISF) from budget 2009 and the operating budget freeze from budget 2010.
I would like to make a few brief introductory remarks regarding the approach my office has taken regarding our analysis of the government's estimates. I will then highlight two areas of interest in the supplementary estimates that are currently being considered by Parliament and this committee. Following this, I would be pleased to answer your questions.
As you are aware, analysis and research regarding the estimates are one of the four legislative business lines assigned to the Parliamentary Budget Officer by the Parliament of Canada Act. Consultations with parliamentarians in 2008 yielded a consensus on how I could best support their scrutiny of the estimates.
One, identify votes that warrant scrutiny. Members indicated they wanted my team to analyze the entire estimates and identify votes where they should focus their limited time and resources.
Two, prepare research to support decision-making. Members indicated they needed independent research to challenge the government's estimates and support the decisions regarding appropriations.
Our screening mechanism identifies areas of spending that warrant the scrutiny of Parliament, its materiality and risk. “Materiality” simply means the amount of money sought by the government in the estimates; the larger the amount, the greater the scrutiny that is likely warranted. “Risk” relates to the potential that the government will be unable to achieve the outcomes it plans with the money it is seeking.
With respect to supplementary estimates (B), as part of our analysis of the 2010 supplementary estimates (B), my team has flagged two issues for you that may warrant further scrutiny by Parliament. The first is the additional $722 million sought in vote 60 of Transport Canada for infrastructure programming, representing approximately one-third of the net incremental resources sought through these supplementary estimates. The second is the $181 million of reallocations across 51 departments and agencies relating to the operating budget freeze.
PBO has issued regular reports on one of Infrastructure Canada's programs, the Infrastructure Stimulus Fund (ISF). These reports were part of the PBO's reporting on the implementation of budget 2009 provided to the House of Commons Standing Committee on Finance (FINA). I am pleased to provide the committee with an update of our research regarding this program.
While the government has been diligent in its reporting on progress against obtaining necessary program authorities (inputs), reporting on outputs has been limited to periodic announcements of projects and project values. Project progress reports continue to suggest a large number of projects will not be complete by the March 31, 2011 deadline. The government's own response to an order paper request indicates that 1,054 of the 3,193 ISF projects will not likely be completed by December 31 of this year.
However, due to the initiative's limited data architecture and data quality, PBO has not been able to provide more detailed analysis, particularly as it relates to output and outcomes. In order to work around the limitations, PBO has attempted to provide Parliament with more robust analysis on program outputs such as project progress and timing of economic activity, as well as program outcomes such as the impact of the program on communities, by using existing government data and by undertaking an independent survey of program recipients to help evaluate the impact of the infrastructure stimulus fund.
PBO obtained expert advice to assist in developing the survey design, undertaking the data collection, and reporting on significant survey findings. The survey took the form of a census in which all eligible organizations were invited to participate. Eligible organizations were largely municipal governments, but they included provincial and territorial governments and other organizations, for example, not-for-profit community groups that received funding under the infrastructure stimulus fund.
Individual respondents were organizational representatives with hands-on knowledge and responsibilities related to the ISF, infrastructure stimulus fund, and funded projects undertaken by the organization.
Field work took place between June 8 and August 3, 2010, which according to the PBO analysis was the period of time that would have seen the greatest amount of construction activity. In total, 644 questionnaires were completed out of a population of 1,129 organizations. This represents a strong response rate of 57%. If this were a random sample survey, the overall results could be considered accurate within 2.02 percentage points, plus or minus, 19 out of 20 times, finite population factor applied. The data were weighted to ensure the results are representative of the distribution of ISF-funded organizations and ISF projects.
The first set of indicators dealt with program administration. Respondents expressed mixed and generally moderate levels of satisfaction with various aspects of ISF administration. There was 65% or higher who were most likely to be satisfied with the process leading from ISF project approval to the construction start date and with the timing of the project approval processes.
A small majority, 53%, expressed satisfaction with the environmental impact approval process for ISF projects, while fewer than half, 42%, were satisfied with the timing of fund transfers for ISF projects from higher-level governments. Dissatisfaction was highest with respect to timing issues: the timing of project approval process, 21%, and the timing of fund transfers from higher levels of government, 18%.
The second set of indicators reflected perceptions of impact of ISF projects in a number of general areas, such as general community welfare, unemployment, earned income, environmental quality, alteration of construction prices, and infrastructure deficit. Overall, respondents had a mixed view of impacts, and there was considerable variation.
The large majority, 87%, think ISF funding has increased the general welfare of their community. Approximately two-thirds, 69%, think it has increased the environmental quality of the community, while over half think it has decreased the infrastructure deficit of their municipality organization and increased earned income in their community.
The results pertaining to perceived unemployment impacts are particularly worthy to note given some of the goals underlying ISF in the context of a stimulus budget. A minority of respondents, 33.3%, said the ISF had a beneficial impact on unemployment. Many also said its unemployment impact was neutral, 43%, or negative, 20% to 21%.
It is worth noting that the structure of the responses tends to suggest the respondents were thoughtful in answering the questions. There was no sense that there was some routinized response pattern tending toward all good or all bad evaluations of ISF.
The next set of indicators had to do with perceptions of systematic technical, as opposed to political, biases in the selection and approval of projects. Were there certain types of projects that were disadvantaged in the selection process? There is a substantial minority of respondents who thought there was some degree of bias in project selection and approval. Sixty-six percent felt that no types of infrastructure projects were systematically disadvantaged by the rules and selection process associated with the ISF, but 27% felt that certain types of projects were disadvantaged. Projects identified as being systematically disadvantaged included projects that require more lead time (26%), water system or wastewater projects (20%).
We then asked respondents to think about a specific project in their community. The specific project that each respondent was asked to focus on was randomly selected and was identified on the first page of his or her questionnaire. The indicators have to do with the number of person years of employment created by a project, average gross pay associated with a person year, the extent to which the project was devoted to purely public infrastructure and the number of months a project was expedited as a result of ISF. Basic analysis showed that these indicators did create jobs at reasonable salaries, mostly in the realm of purely public infrastructure and in notably expedited fashion as a result of ISF. Our background variables did influence these indicators in a number of ways.
Projects located in some jurisdictions are much more likely than others to generate reasonably large numbers of well-paid positions and be considerably expedited compared to what would have been the case in the absence of ISF. In addition, some types of projects were much more likely to create a relatively large number of jobs and/or positions with good reimbursement. Solid waste management projects were particularly ineffective in that regard. Alternatively, public transit was very effective at employment creation, and airport, highway/regional transit and port/cruise ship type projects were particularly effective in producing higher paid employment.
Considerably more analysis would need to be done to completely unpack the implications of these findings. However, there are at least three possible interpretations of the implications.
First, the infrastructure stimulus funding should be directed more explicitly to some types of projects rather than others, particularly in the context of a stimulus measure with desired employment outcomes.
Second, there are lessons to be learned from some of the jurisdictions that have produced the most effective results of projects from a management and planning capacity perspective.
Third, some organizations or jurisdictions need different rules or greater assistance to effectively participate in an ISF-type program.
Some of the preliminary analysis of detailed verbatim responses by respondents provides moderate support for these possibilities.
Liberal
The Chair Liberal John McKay
Excuse me, Mr. Page, we're at the 12-minute mark. We generally stop at 10, but I'm in the hands of colleagues if they wish to let you finish your presentation.
Conservative
Chris Warkentin Conservative Peace River, AB
Is it the budget freeze or the estimates that we're here to talk about? I think it's important that he get to that.
Liberal
NDP
Pat Martin NDP Winnipeg Centre, MB
We're almost at the end of this section, and then we will be getting to the operating budget freeze. We have one page left, so I suggest we let him finish. If we run a little late, we run a little late.
Liberal
The Chair Liberal John McKay
I'm in the hands of colleagues.
Please feel free to finish your presentation. Go ahead, Mr. Page.
Parliamentary Budget Officer, Library of Parliament
Following are some considerations for parliamentarians.
First, progress reports continue to suggest that a large number of projects will not be completed by the March 2011 deadline. PBO ISF survey results indicate considerable variation in ISF program and implementation impacts across the country. It is apparent that more precise targeting of projects and recipients could lead to better program outcomes.
Second, there is a significant opportunity for the government to improve reporting on stimulus measures. The ISF program falls under the provision of a transfer payment program to other orders of government. These have different requirements, under Treasury Board policy, than other types of transfers, because they limit the number of mandatory requirements in the contribution agreements. Parliamentarians might want to be more explicit as to what performance information they require.
Third, the government may wish to consider updating the PBO survey at the end of the program to ensure that parliamentarians and Canadians have a better picture of the effectiveness and efficiency of the program, a program that will cost Canadian taxpayers close to $10 billion, all deficit financed.
On the operating budget freeze, the supplementary estimates 2010-11 contain references to 51 reductions in departmental and agency operating budgets attributable to “savings identified as part of the cost containment measures to reduce the rate of growth in operating expenditures announced in Budget 2010”. The operating budget reductions proposed by the government are approximately $181 million in 2010-11, or over 60% of the $300 million target announced in Budget 2010. On average, the cuts represent approximately 0.4% of the affected budgets.
My staff has also prepared a note that enumerates the reductions and provides a list of the 10 largest reductions, as measured by absolute dollars and as a percentage of affected organizations' operating budgets.
Since the government announced these cuts in Budget 2010, I have requested basic information regarding how the cuts will be implemented, but I've been ignored. The committee has asked for similar information and has not yet received a response, or it received a response today. Now the government is seeking parliamentary sanction for those cuts through the supplementary estimates. Given that there are no details regarding how departments and agencies will manage these cuts, this could be an area of risk that warrants further parliamentary scrutiny. Or, as I highlighted in the note, before the committee reports back these supplementary estimates, it may wish to satisfy itself that it knows how each of the 51 organizations is achieving the operating savings, including which positions are being cut and how service levels may be affected.
I would be pleased to answer any questions committee members may have regarding our approach toward supporting parliamentary scrutiny of the estimates, or either of the two areas I have flagged for your attention.
Thank you. Sorry for going late.
Liberal
The Chair Liberal John McKay
Thank you, Mr. Page.
You know that you're always welcome at this committee. I just want to make sure that I can exercise a little discretion in favour of the Parliamentary Budget Officer, because you do serve us all well.
Mr. Regan, you have eight minutes.
Liberal
Geoff Regan Liberal Halifax West, NS
Thank you very much, Mr. Chairman.
It's very disturbing that you first brought up on April 12 of this year the problems you were having getting detailed information from government departments about how they were going to achieve the reductions they were supposed to achieve through the freeze. Of course, on October 5 of this year, my colleague Madame Bourgeois raised a motion trying to assist you, calling on the government to provide you with that information. The motion was passed, and yet you still don't have it.
I want to review some of the departments and the amounts that they are talking about in terms of budget reductions. I think you'll confirm in each case that you don't have the information on how that's going to be achieved.
For Agriculture, we've heard all kinds of concerns from colleagues about the difficulties farmers are having, yet we see a $3 million cut for the Department of Agriculture and Agri-Food.
We see a $14 million cut to the CBC. We have no idea what that means and what the impact of that is going to be.
At a time when we see record waiting times for people to deal with immigration files, whether it's for someone who wants to come to Canada, who wants to bring a relative, perhaps, say, their spouse.... I know people who are waiting for their spouse to come to Canada. In fact I can think of a case in which a women and her daughter are here and they're waiting for the husband, the father, to come from Africa. They have been told by the minister's office, “Don't even talk to us until the application has been in for a year.” Often it takes at least 18 months for those to be processed, and yet we see a cut to that department of $2.5 million, and they aren't able to tell us how they're going to achieve that.
We see the Department of Environment being cut by $3 million. We don't know how that's going to be achieved and what they're actually cutting.
We see the Department of Fisheries and Oceans being cut by $6.5 million. I can tell you, having some experience as a former minister of that department, it's one that was always tight for dollars and usually underfunded, like Immigration. I'd like to know how they're going to accomplish that and what important programs they're going to be cutting as a result.
The Department of Health is being cut by $5 million.
The National Research Council, as if innovation and research weren't important, is being cut by $3 million.
Statistics Canada is being cut by $3.35 million. That's no surprise in view of the government's attitude towards information, towards the long-form census, for example.
It's even more interesting, perhaps, that the Department of National Defence is facing a cut of $80 million, and we have no idea how they're going to achieve that.
We see the Canada Border Services Agency being cut by $9 million, and we have no information on how they're going to do that.
We have CSIS. This is a government that talks about how great it is on security issues, and here they are cutting Defence by $80 million, Border Services--I'm sure that would be a concern to the Americans--by $9 million, CSIS by $5 million, and Corrections by $5 million. You've already raised the concern that the things they're doing and the bills they're passing are going to increase the cost of corrections, and yet they're projecting that they're going to save $5 million and can't say how. And of course $3.6 million is being cut from the RCMP.
What comments do you have on that, Mr. Page?
Parliamentary Budget Officer, Library of Parliament
Sir, I agree with you. We've been frustrated in trying to get the information we think we need in order to provide you with a sense of what the risks are with respect to achieving those savings both from a fiscal perspective and from a service-level perspective. We feel parliamentarians should have that information when they're signing off on the estimates.
Liberal
Geoff Regan Liberal Halifax West, NS
So you're telling us that basically there's no way for us as a committee, for us as parliamentarians, to really assess whether the government can achieve the freeze that it claims it can, and can achieve the reductions that it's listed for each of these departments. As far as we're concerned, these are phantom reductions.
Parliamentary Budget Officer, Library of Parliament
Well, sir, I'm not saying they're phantom reductions. I'm sure if parliamentarians vote, those reductions will be implemented. What I can offer you is an analysis as to whether there are risks, particularly in the area of service levels, both this year and in future years as the freeze is maintained.
Liberal
Geoff Regan Liberal Halifax West, NS
Since the government won't provide us with this kind of information, it's pretty hard for us to do our job as parliamentarians, it seems to me.
My colleague, I think, has some questions for you.
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
Just in that vein, as you may be aware, in the last committee meeting we had a number of people here from a number of departments. I asked each of them to describe how they're going to achieve their budget reductions. Again this morning I asked a similar question, whether they were going to report to Parliament or to this committee how they're going to get those budget reductions. Their answer predominantly was travel, hospitality, and conferences. I don't think those savings that my honourable colleague just announced are going to be found to a significant level in those areas. When we asked where we'd find further information, we were asked to check the planning and priorities reports.
Is that sufficient? Is that what we should be doing? What further information should we be demanding, and how might we be able to further find the information? What would your advice be to us?
Parliamentary Budget Officer, Library of Parliament
We are continuing to work with departments to get information, so that we can provide you with the analysis that we think you need in terms of understanding what the risks are. In the past two weeks, we've sent out letters to 10 different departments to get their human resource plan, so we can assess, potentially, the prospects of getting savings from attrition, as an example, so we can understand the relationship of attrition savings that are being requested of these departments from a savings perspective.
At this point in time, as I said earlier, we don't have enough information to give you a risk assessment.
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
Last week I put a question to the Privy Council Office, specifically around the Prime Minister's Office, and was told they had a budget, up until last year, for full-time equivalents of 85 and that they are now at 114. That seems like a fairly significant increase in the Prime Minister's Office, and that was a direct request for information.
What I'm concerned about is that we have a fairly significant 20-person increase in one year in the Prime Minister's Office, yet we're having cuts in other offices where we can't find out either through attrition, as you indicated, or through other means, whether we will have an impact on service levels because we won't be able to have the additional employees that may be required.
When you look at the...I'll use the term “puts and takes” in this particular ask in estimates; they're asking for almost an additional $2 billion in spending.
My point is that some of these requests are of interest, and I just want your viewpoint on whether you think they should have been in the original budget. I'm concerned that we're asking for another $2 billion. I need your advice on this. We're being asked to approve another $2 billion in additional spending. I don't know if it's new spending or additional spending in these particular estimates. In my opinion, that's a significant sum of money. Should that not have been in the original budget? Am I correct in that?
Parliamentary Budget Officer, Library of Parliament
Yes, the money should have been in the budget. I'm assuming the $2 billion that you're referring to was provided for in the budget. I guess the question now becomes, as you appropriate, do you have the information to know what's behind the money, how the money will be used, both in terms of new moneys and the reductions?
Liberal
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
Thank you, Mr. Chair.
Mr. Page, gentlemen, good morning and thank you for joining us again today.
Before I ask you some questions, just like my colleagues, I want to deplore the fact that, following the motion I presented last September, you were not given the basic information on how the reductions will be made. You even said it yourself.
Not only do I deplore it, Mr. Chair, but I find it appalling, as well. I feel that the taxpayers of Canada and Quebec are entitled to answers to their questions. They elect MPs who, to the best of their abilities, try to get answers about how their money is being managed. Unfortunately, neither the MPs nor the parliamentary budget officer, who the House has given powers to, can get answers.
This morning, Mr. Chair, you shared with us the response of the Treasury Board president to my motion, and perhaps to some of Ms. Coady's questions as well. At the time, she had made observations and presented motions.
We are a laughing stock. Listen up: we read that people are busy working on responding to our request, but really it has been two months since the question was asked. We've also been told that the information requested pertains to confidential Cabinet documents. Can you tell me what's so confidential? These people manage our money and we can't even get answers because it's confidential? Let's wake up! We let this government manage confidential documents, but it's our money. These people are paid for that with our money.
Then we read that the Treasury Board Secretariat does not have the information centralized, but the Treasury Board Secretariat gives the order to make budget cuts. They are laughing at everyone.
I wanted to bring this to the attention of my colleagues. I think I've managed to do that.
Mr. Page, I have a question for you about the Correctional Service of Canada. Of the 10 largest budget cuts, the Correctional Service of Canada must reduce their budget by $4.8 million. But we know that they will be increasing their staff by more than 4,000 full-time employees.
Can you tell me how they plan to reduce their budget by $4.8 million when they are increasing the number of people working for them? Can you give me an idea of how they will manage this?