Government Operations Committee on April 4th, 2012

[David McGee]

The major reform in the 1990s was to insert the post-budget review I talked about. Up to the 1990s, Parliament exclusively confined itself to approving the estimates and then effectively paid no attention to the way in which those estimates were used. It had no processes for reviewing the outcomes of the expenditures it had approved.

That seemed to me, and to a number of other people at the time, to be a major omission in our system. Although the estimates approval process did not dramatically change in the 1990s, the post-budget examination system has been considerably improved by requiring better financial information to be presented to Parliament shortly after the end of the financial year, and that all of that information and the reports from the departments are referred to the individual subject select committees for consideration.

Those committees then draw up lists of questions of other issues that arise from the information and put them to the departments. Then, on a proportional basis, they call the chief executive, the deputy minister, and the senior officials from that department before the committee to answer, in examinations like this, for the way in which they have used those resources and their efficiency or otherwise in terms of the actions they've taken during the previous financial year. There is a comprehensive post-budget scrutiny of departmental performance.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

What changes would you recommend to our Canadian system, as far as the budget process is concerned?

[David McGee]

Well, I would only recommend a change to another parliamentary system with a great deal of trepidation. I don't know enough about your system to suggest any specific changes.

For instance, I know you have a parliamentary budget office. In New Zealand we do not have a parliamentary budget office. I know you have a public accounts committee. In New Zealand we do not have a public accounts committee. I understand that you have pre-budget hearings before the finance committee; we do not have that. I think one of my suggestions would be exploring ways of involving other subject committees in pre-budget scrutiny.

One thing I would say very firmly is that budget scrutiny isn't just the job of the finance committee; budget scrutiny is the job of all of the subject committees in regard to the particular sectors they are charged with overseeing.

One of the things we've done in New Zealand, and I think quite successfully, is involve all of the subject committees—and there are 13 of them in our Parliament—in budget consideration and post-budget consideration.

I don't know the extent to which you do that, but I think it's very important to bring the other committees in. It's also important for the finance committee to have an overall stewardship role to look at the macro effects of the budget, and also to supervise.

In some ways this is what happens in New Zealand. Our finance committee supervises the examination of estimates and the post-examination of the budget by the other subject committees. It keeps them up to speed. It allocates the estimates to them; it allocates the financial reviews to them, and it ensures that they do their job. I think that's an important role for a finance committee to take on.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you.

[The Chair, NDP, Pat Martin]

Thank you, Mr. Gourde, and thank you, Mr. McGee.

Next, for the New Democratic Party, Mr. Mathieu Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you for being with us, Mr. McGee.

When it comes to votes, your system is slightly different. If I understand correctly—and you can correct me if I am wrong—votes are classified by output area, such as health or police, rather than by department. Within each vote are a number of appropriations, I think.

We have a great deal of difficulty understanding some things. Are your members able to readily understand output appropriations and find required information in the main estimates?

[David McGee]

You are correct that our estimates are divided by sectors rather than by departments, but they generally coincide with individual departments. Some departments have responsibility for more than one vote and some departments' votes are contained in a part of another vote.

Some of the criticism, I think, of New Zealand is that we have too many departments and that we probably have too many estimates votes.

As far as the information that's presented to parliamentarians is concerned, it's extremely comprehensive. I don't think one could complain that information isn't presented to parliamentarians, but the problem is getting one's head around it, understanding it, and using it in a satisfactory way. There's a great deal of information there, but a great deal of work sometimes has to be done to find out what that information means. So I don't necessarily believe that individual deputies, parliamentarians, do understand, and probably could benefit from some greater support in that regard.

[Mathieu Ravignat, NDP, Pontiac, QC]

In New Zealand, are members able to track spending from announcement to inclusion in the estimates to actual spending during the financial year?

[David McGee]

It's very difficult, I think, to trace an expenditure authority into an actual implementation during the course of the year. Parliamentarians, of course, do ask questions of ministers during the course of the year. They have the ability to call in officials and to examine them, but there is an awful lot else going on. You're passing legislation during the course of the year, and your attention is not fully focused on the way in which government departments are administering the appropriations they are making on a day-to-day or week-to-week basis. I think you probably would find you simply don't have the time to monitor in that kind of detail.

That's why it's quite important, it seems to me, to have a point at which the department then has to come back to Parliament at the end of the financial year and report on the way in which it did use those resources, its stewardship. That's what, in our system, financial review provides: an opportunity for parliamentarians to engage with departments on an annual basis.

[Mathieu Ravignat, NDP, Pontiac, QC]

I have the feeling that it is a challenge for parliamentarians in New Zealand, just as it is for us here.

I also wanted to ask you a question about the officers of Parliament who verify the budget process, votes, and so on. I believe you mentioned three. Could you describe their role and their ability to inform parliamentarians?

[David McGee]

Yes, I could.

One of the offices is very important to the parliamentary process of considering expenditure approvals.

There are three officers of Parliament in New Zealand. The oldest is the ombudsman, the office that I hold, which is traditional ombudsman work in terms of looking at allegations of maladministration throughout the public sector. And also in New Zealand, the ombudsman is the adjudicator on disputes over access to freedom of information. But there isn't a great deal of ongoing, day-to-day contact between the ombudsman and the way in which Parliament works.

A second officer of Parliament in our system is the Parliamentary Commissioner for the Environment, who is an independent official who will launch inquiries into policies or actions that have environmental consequences or implications. It's a voice outside government to which groups can turn when they think something is going to have an adverse consequence for the environment, which can then be investigated and reported to Parliament. The Parliamentary Commissioner for the Environment becomes involved with parliamentary committees if they're carrying out an inquiry with environmental implications, but it's a very occasional involvement with the work of Parliament.

The third official is the Auditor General. The Auditor General's Office does have an ongoing relationship with Parliament because the Auditor General's staff are available to be attached to parliamentary committees, especially when they're doing the post-budget review of the way in which governments and departments use their expenditure authority. The Auditor General's staff are also available during the estimates, but I don't think that committees find the Auditor General's staff as useful in their estimate approval process as they do in their post-budget analysis, because that's where the Auditor General's particular strengths are brought to bear.

Although we don't have a parliamentary budget office, there is support available from the Office of the Auditor General to parliamentarians in their budget approval and in their post-budget analysis phases.

[The Chair, NDP, Pat Martin]

Thank you, Mr. McGee.

Thank you, Mr. Ravignat.

Next, for the Conservatives, is Mr. Ron Cannan. You have five minutes, Ron.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thanks, Mr. McGee, for sharing your wisdom for the committee's review of the process and the consideration of estimates and supplies.

First I would like to say that if you see a beautiful blonde 21-year-old Canadian girl running around, it's my daughter on spring break. She's going to university in Australia, but she's spending ten days with a bunch of international students in New Zealand. I hope they're behaving themselves.

[David McGee]

I'll watch out for her.

[Voices]

Oh, oh!

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thanks.

This is a bit of a daunting task because of the volume and complexity of some of the information we've received. We're trying to make it a little more understandable.

I believe New Zealand in the 1990s restructured the timing process. That's something we've been looking at. April 1 is a new fiscal year for the Canadian government, and we're looking at the timing of the budget. I notice that you have to table your budget at least 30 days before the beginning of your fiscal year, and apparently it's even earlier than that. What are the advantages of that?

[David McGee]

In New Zealand we were very lax until about 1990 in our timetabling of the budget. In 1990 we introduced a new system. Our financial year starts on July 1 every year and runs until June 30. The legal requirement is that the budget must be presented to Parliament within 30 days of the financial year commencing. So a budget could be presented up to the end of July, but in practice our governments present the budget in May. That is about two months before the end of the financial year. The estimates process then gets under way before the financial year opens. But the estimates process takes about three or four months to run, so the budget isn't actually approved until one or two months into the new financial year.

It's a huge improvement on the system we used to operate under, which was temporary financial authorities for the majority of the year, and then final budget approval about one day before the financial year ended. It has been a major improvement in the way the system works. It works much more prospectively now than it ever did.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

How far in advance does the government announce their budget date?

[David McGee]

The budget date is announced in about March for a May budget. The government tells Parliament when budget day will be.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

In Canada it's usually a week or two before. There's not much of a heads-up.

I notice that you follow another procedure. The committee, six weeks prior, sends a questionnaire to all of the departments or agencies. This is a standard questionnaire. What kinds of questions do they ask in that questionnaire?

[David McGee]

There's a standard set of questions that have been drawn up by finance committees in the past, but any other member might add particular questions to the questionnaire.

One of the things that committees are very interested in is the use of consultants—the extent to which departments propose to use consultants in the coming financial year, and the expenditure that is to be placed upon consultants. They are looking for the extent to which supposed savings by reducing permanent staff are actually not being translated into savings because the expenditure is being translated into engaging more consultants. That's quite a strong area of interest to departments.

The questions tend to be very much what individual members at a hearing, before sending out the questionnaire, want to put to the particular committees. The individual spokespersons from particular parties who are on those committees will have their own agenda on what questions they wish to ask. We had a list of over 100 questions addressed to the Office of the Ombudsman on its operations.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Is there a required timeline for the response?

[David McGee]

The questionnaire is usually sent out as soon as the budget date is known. The answers are expected to be delivered back to the committee the day after budget day. You can have up to two months to work on it. It's often quite a reasonable period of time for departments to prepare their replies.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That's very interesting. Thank you very much.

[The Chair, NDP, Pat Martin]

Thank you Ron, and thank you, Mr. McGee.

Next, for the Liberal Party, is Mr. John McCallum for five minutes.