Government Operations Committee on April 4th, 2012

[Mike Wallace, Conservative, Burlington, ON]

This is my final question. Our schedule is that we can present a budget at any time, technically, but normally our year starts April 1. We had our budget last week, for example. The main estimates that were presented didn't reflect any of the changes that were in the budget, because there just wasn't time for that.

Is there a lapse of time between when the budget is presented and the estimates of the actual spending that is to occur in the new fiscal year? Does that happen in Australia? Is there a timeframe for them to catch up?

How big are the supplementary estimates? We have at least three here in a fiscal year. We're trying to see if we can reduce the number of supplementaries and have the mains actually reflect what's in the budget, if that's possible.

What happens in Australia?

[Harry Evans]

Well, the financial year starts July 1. The main appropriation bills and the estimates are presented in May, and the estimates hearings take place in May. The additional estimates come in in February, and then you get the additional estimates hearings. Basically, that's it, but sometimes governments introduce additional appropriation bills outside that program. In that case, the Senate has, on occasion, authorized additional estimates hearings, especially estimates hearings on those additional appropriation bills.

I should say that the appropriation bills are only about 10% of government expenditure. Most government expenditure is contained in special appropriations, which are scattered through a large number of statutes on the statute books. When the main appropriation bills come in, these explanatory notes on the departments cover all the departmental expenditure, not just the expenditure in the appropriation bills.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, sir.

[The Chair, NDP, Pat Martin]

Thank you, Mike. You made very good use of your five minutes there.

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

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

Thank you, Mr. Evans.

My questions are a little similar to Mike Wallace's.

Are all the measures contained in the budget included in the main estimates?

[Harry Evans]

Yes. The estimates cover both what is in the appropriation bills and all the other expenditures that the departments make under other appropriations. All those estimates are open for examination at the hearings.

[John McCallum, Liberal, Markham—Unionville, ON]

In our system the main estimates do not contain the most recent budget measures, which provides a bit of a disconnect. It means that the budget measures have to be introduced later in the fiscal year. But that does not happen in Australia.

[Harry Evans]

No. What you have before you in May are the estimates contained in the main appropriation bills, but you also have the estimates of expenditure in all other statutes the departments are operating under.

All those standing or special appropriations are elaborated in those explanatory notes and they are open for examination at the estimates hearings.

[John McCallum, Liberal, Markham—Unionville, ON]

What sorts of expenditures would be in supplementary estimates?

[Harry Evans]

Basically, the supplementary appropriation bills and the estimates are to top up the annual appropriation. They are ongoing expenditures of departments—running expenses of departments, if you like.

At the same time that the supplementary estimates are presented, the departments present their estimates of expenditure under their special appropriations. For example, the whole social welfare program, as it used to be called, is contained in special appropriations. It's not in the annual appropriations; it's contained in the other statutes.

All the expenditures are elaborated in the estimates and are open for examination at the time of the estimates hearings.

[John McCallum, Liberal, Markham—Unionville, ON]

This is the same question that I asked your counterpart from New Zealand. One of the objections that some people in Canada have to conducting the estimates process at the same time as the budget process is one of budget secrecy. If large numbers of civil servants are working on the estimates related to the budget before the budget is announced, then there could be a greater chance of leaks.

Is that an issue at all in Australia?

[Harry Evans]

No. When you have the estimates before the Senate, you have the appropriation bills and the complete estimates statements by the departments, and their explanatory notes. It's all out there in the open. There's no question of budget secrecy at that stage.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

[The Chair, NDP, Pat Martin]

Thank you, John.

Mr. Wallace thought of a few more things he'd like to ask you.

[Mike Wallace, Conservative, Burlington, ON]

Yes, I have. Thank you, Mr. Chair.

I want to talk to you a little bit about the accrual over cash. In Canada everything is on accrual, except for the estimates, which are presented to us on a cash basis. I think one of the reasons is that they think it's easier for members of Parliament to follow the numbers because they understand cash in and cash out. For accrual, it's over time, and there might not be the....

Was Australia ever on a cash basis? I had heard that they are on accrual and thinking about going back to cash. Is that something I heard that's inaccurate, or have you always been on an accrual basis?

[Harry Evans]

Accrual accounting was adopted only about eight years ago. Before that we had cash accounting.

Accrual accounting was adopted, and then there were a great number of complaints from senators, as they couldn't follow the accrual accounts. As a result, the estimates began to creep back to a cash basis.

There is talk at the moment of going back completely to cash accounting. That hasn't happened so far, but there has certainly been talk that it's being contemplated.

[Mike Wallace, Conservative, Burlington, ON]

One of my issues here is that we all come from different backgrounds—all 308 of us who are sitting in the House of Commons—and not all of us have had the same kind of training or background.

Is there training for members of Parliament or senators in terms of being able to understand the financial aspects of the Parliament in Australia?

[Harry Evans]

It's very much on-the-job training.

The Senate department does some training for senators. When I say “training”, it's orientation courses for senators. They also are able to call upon departments and the audit office to give them briefings on particular things they're interested in and to take them through how the public accounts system works.

Basically, it's on-the-job training. They learn from their colleagues and they learn from the estimates hearings themselves. Their attitude is that if they don't understand the estimates then it's the public servants' job to help them understand and to get them to a point where they do understand. They'll keep asking questions until they understand.

[Mike Wallace, Conservative, Burlington, ON]

I just want to be clear. I have heard some feedback from some of the chief financial officers in each department that they'll come to a committee meeting for us to deal with estimates but they have no concept of what the questions might be, on what topic. They can be anywhere within the estimates. And of course, as you said before, when the minister is here, it's mostly politics. We're able to ask the staff or the bureaucrats questions. Are the senators and parliamentarians there required to submit their questions in advance in writing before they show up at the hearings? Is that an accurate statement?

[Harry Evans]

They may do so, but they don't have to. They can signal their areas of interest in writing, or they can just get the committee staff to ring up departments and say they'd better bring the people who understand this because there are going to be questions about it, but they don't have to do that.

Very often the questions are not expected. That's where departments start taking questions on notice and answering them in writing later on for the supplementary hearings.

[Mike Wallace, Conservative, Burlington, ON]

Based on what you said, you have one scheduled supplementary, and that's in February, which is about seven months through your fiscal year. How is that in comparison to the actual main estimates? Is that normally a very big piece because it's doing stuff they didn't plan on? How much scrutiny do the supplementaries get?

[Harry Evans]

The theory is that the supplementary estimates, under the rules of the Senate, are confined to matters that senators signal for further questioning and matters arising from the written answers to questions taken on notice. However, in recent times, senators' notification of matters to be questioned simply consist of the name of the program. They simply say they're going to ask more questions about this program.

[Mike Wallace, Conservative, Burlington, ON]

It doesn't mean, necessarily, it's an appropriation of new money. It could just be to follow up on questions they had before.

[Harry Evans]

Yes, absolutely, and things that have arisen since the main estimates--some programs that are in trouble or something.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, sir.