Mr. Chair, committee members, thank you for the invitation to appear before the committee this afternoon on behalf of Human Resources and Skills Development Canada. I would like to introduce my colleagues who are with me today: Paul Thompson, assistant deputy minister of our Payment Processing and Services Branch; Jacques Paquette, of our Income Security and Social Development Branch; and Marc Lebrun, director general in our Learning Branch.
Allow me to offer the committee an overview of HRSD's portion of the Supplementary Estimates (C), tabled on February 28, 2012. Through these estimates, we provide Parliament with an update on various statutory programs. Statutory items are included in the estimates for information only because Parliament has already approved the purpose of the expenditures and the terms and conditions under which they may be made through other legislation.
You will note that the only decrease in the forecast of the adjustment to the statutory items is for the old age security benefit, with an adjustment of $410 million.
The decrease impacts the forecast and not the actual benefits paid to individuals.
In the fiscal year 2010-11, the federal government paid $27.2 billion in old age security payments, while it is estimated that $28.8 billion will be paid in 2011-12. The adjustment of $410 million is explained by changes in the forecasted average monthly benefit rate, as well as changes in the number of beneficiaries and the total amount recovered from the higher income seniors through the OAS recovery tax.
All of the other statutory adjustments are showing increases. For example, an increase of $74 million for the Canada student grant program reflects the revised take-up expected in 2011-12 and takes into consideration current disbursement trends.
The Canada student grant program provides up-front grants to students from low- and middle-income families, students with dependents, part-time students, and those with permanent disabilities.
In addition to the statutory items, HRSDC is asking for an additional $218 million in voted appropriations. This includes $162 million related to our request for the writeoff of debt owed to the crown for unrecoverable Canada student loans under vote 7. As a general practice, a separate vote is established for authority to write off debt.
A loan to an outside body is considered a non-budgetary item since the loan is expected to be repaid. Student loans are an asset for the Government of Canada and such writeoffs require Parliament's approval.
Mr. Chair, this student loan writeoff item is incremental to the one approved in 2011-2012 supplementary estimates (B). Given that last year's supplementary estimates (C) did not receive royal assent, we had reintroduced this item in supplementary estimates (B) this fiscal year.
The $162 million included in supplementary estimates (C) is for writeoffs of debt identified as uncollectable in 2011-12. According to the debt writeoff regulations, debts should be written off in the year in which they are determined to be uncollectable. Our request under vote 7 is consistent with such regulations, as we have determined these debts to be uncollectable this fiscal year.
Allow me to provide a little context.
A large percentage of students respect and repay their loans. Some borrowers have difficulties with repayment, and we have measures to support them through the repayment process. Nevertheless, some loans go into default. We have a vigorous recovery process, including working with our partners at Canada Revenue Agency.
However, the Canada Student Financial Assistance Act establishes a limitation period of six years between the time the borrowers last acknowledge their Canada student loan and any legal activity the crown can undertake to recover that debt. Once this period has expired, the crown no longer has the authority to take action to collect on that debt. Over 98% of our writeoff requests under vote 7 have been deemed unrecoverable for this reason.
The Office of the Superintendent of Financial Institutions is tasked with producing an actuarial report as stipulated in the Canada Student Financial Assistance Act. The Chief Actuary's most recent report, which was tabled in Parliament on October 7, 2011, forecasts direct loan writeoffs over the next 10 years.
For next year, 2012-13, the expected write-off is $164 million.
Also included in the voted appropriation is $56 million under vote 1, operating expenditures.
This is for funding to realign operating resources following the review of our department's administrative cost allocation. This request reinstates a corresponding reduction reflected in vote 1 of our main estimates. Timing of the approval process is the reason for the reduction and this request for reinstatement. It represents no net increase of funding for the department.
I hope this overview has given you a more precise idea of the content of the Supplementary Estimates (C) for our department.
My colleagues and I would be happy to answer your questions.