Government Operations Committee on Oct. 30th, 2012

[Bill Matthews]

Supplementary estimates (A) is historically reserved for items that cannot wait for later in the fiscal year, so they are often, though not always, linked to budget. It's often linked to budget when departments have a need to spend more quickly or when there is an urgency of some kind.

Traditionally, supplementary estimates (B) are our largest supplementary estimates. Departments have had additional time to build their detailed spending plans and performance indicators. Before spending gets approved by Treasury Board, they want to make sure there is a robust performance measurement system in place so that they can come back in departmental performance reports and talk about how programs are performing. That's the balance we have to strike.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you.

[Brian Pagan, Director, Fiscal Policy, Department of Finance]

Can I just add to that?

[The Chair, NDP, Pat Martin]

Yes, you may.

[Brian Pagan]

The supplementary estimates (A) are relatively new introductions to the cycle. It was done at the request of parliamentarians and the Auditor General, who called for more timely allocation of appropriated money to departments.

In the previous construct, when the first supplementary estimates of the year were in the fall, Parliament wasn't approving that appropriation until December, so nine-twelfths of the fiscal year had elapsed before departments were getting their money. With supplementary (A)s, that money's being voted to departments three months into the fiscal year. As Bill mentions, a significant portion of this is related to budget initiatives or other priorities of the government.

It adds to complexity by introducing another piece in the cycle, but it's motivated by timeliness.

[The Chair, NDP, Pat Martin]

That's very interesting, Mr. Pagan.

When was that change with the supplementary (A)s brought into effect? Do you remember?

[Brian Pagan]

It was in the spring of 2007.

[The Chair, NDP, Pat Martin]

Really. That's interesting.

We'll now go to Bernard Trottier.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you, Mr. Chair.

Thank you for coming in, once again, and also for your contributions during the committee's study.

You know, I did a bit of scorekeeping on the recommendations. There were 16.

It looks like there are seven that you agree with outright and six that you tacitly agree with, even though it's not under your purview but under the House of Commons. I see 13, then, that you agree with.

There are two that you disagree with: the fiscal year and the tax expenditures recommendation.

One you neither agree with nor disagree with, and that's the role of the Parliamentary Budget Officer.

I want to focus on the ones that you disagree with right now. In terms of the fixed budget date, I understand the challenge. The other option we looked at was changing the fiscal year—taking this whole machinery of government, which has been in place since 1867, and having a fiscal year that starts April 1.

The challenge we have is that since things were changed in 1968...apparently it was just one committee of supply that looked at all the estimates. Then it was split up into various committees to study the various estimates. However, the main estimates that get studied don't contain any budget items. So it's a frustration, when you ask a question about a recently introduced budget item, typically in March, and then you actually ask questions about the main estimates, and the answer is, well, none of those items are in the main estimates.

Is changing the fiscal year something that should be explored further, in your opinion—to perhaps July 1, let's say—so that the main estimates would reflect some of the items from the budget?

[Bill Matthews]

We talked about changing the fiscal year. To be blunt, I don't see any potential of fixing this issue by changing the fiscal year.

The issue that we have between mains and budget is not driven by the fiscal year; it's driven by the fact that you have money that gets into a budget, which needs to be put in place. There's no legal requirement, but generally speaking, the budget is tabled before the fiscal year starts. You have a law that says departments can't spend money without Parliament's approval, which means Parliament has to appropriate something before the fiscal year starts, regardless of when it is, and before the detailed spending review and planning that departments do after the money's in a budget, before they bring it to Treasury Board.

So regardless of when you put the fiscal year, that's the reason for the delay. Items are in a budget, and then departments need time to actually develop their detailed spending plans. That's the issue. It's not about the fiscal year.

I'm not sure if the Department of Finance wants to add anything.

[Douglas Nevison]

As I think we discussed the last time we were here, I think there are unintended consequences that could go along with switching the budget cycle and the fiscal year.

One of the key inputs to the budget is the public consultation process that's undertaken by the finance committee. If you changed it and things shifted around, you'd have to move that, and it may have an impact in terms of public engagement.

Again, I think as Bill mentioned, the key aspect is just the time it takes for a budget measure to go through the process to get appropriated. Regardless of what the fiscal year is, you're still going to run into that issue.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Maybe, Mr. Nevison, you could expand on it from a finance point of view. Is there something special about March? We talked about how February 1 would cause problems, because you wouldn't have the latest information in terms of the economy, but economies are constantly changing anyway.

Even though we don't have a fixed budget date today, by tradition we've almost always done a budget in the spring, in February or March, every year. If finance has to go to a certain calendar because spring is the most sensible time to introduce a budget, why not change Treasury Board's operations in terms of that fiscal year? What happens with finance, and why March?

I understand also that in a minority Parliament situation there might not be a budget because it doesn't get passed. If you have a law that says a budget must be in place by a certain date and the budget doesn't get passed, then you're basically operating the government without a budget. We've done that in the past.

[Douglas Nevison]

I think in some sense it is dictated by your point about the fiscal year. The fiscal year starts April 1. The budget, as I mentioned, is presenting the government's fiscal plan for the upcoming five years, so in this year we're preparing for budget 2013. I don't know what the date of that will be, obviously, but it's looking at the forecast from April 2013 through to March 2014 and the four following years.

March just tends to be the point at which you have as much information as possible, both in terms of what the economy is looking like from a historical perspective and also in terms of the fiscal numbers that we get on both the revenue and the spending sides through the year. In terms of forecasting, getting your starting point makes a huge difference in terms of the certainty that you can attach to your forecast. It's just that from a departmental perspective, the more information we have, the more confidence we have in our forecast.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you.

[Bill Matthews]

Mr. Chair, could I add one comment?

You mentioned the two recommendations the government disagreed with, and I did want to give my colleague from finance a chance. In terms of the recommendation on tax expenditures, I don't view the government as disagreeing with that. I view the government as taking action that meets the same objective in a different way, and I thought maybe Frank might want to elaborate on that.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Okay. It's my interpretation.

Actually, I agree with what you're saying about the tax expenditure recommendations. You do have a comprehensive report that's currently put together on tax expenditures. We don't review that in our committee, and I'm not sure if the finance committee reviews it.

What would be the appropriate forum for airing the tax expenditure report that's compiled every year?

[Frank Des Rosiers]

I'd just like first to reiterate the point about the agreement in principle. We do agree with the thrust of the recommendation. In terms of where it would best belong in House of Commons activities, as an official, I don't feel I am the one to say where it should go, either by expertise or by responsibilities. That's really up to the House of Commons to determine. It's a document that we make available to parliamentarians and the general public; it's available, and we're always happy to speak to it.

Thank you.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Where is it reviewed today? I wasn't sure....

Do I have some time?

[The Chair, NDP, Pat Martin]

You don't really, but I'll let you finish your thought.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Is it typically reviewed in the finance committee, that report?

[Frank Des Rosiers]

There's no set committee that has been historically reviewing it per se. We've had ad hoc requests here and there from parliamentarians, but there isn't a set committee at the moment.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Okay, thank you.

[The Chair, NDP, Pat Martin]

Thank you, Bernard.

It's now the round set aside for the Liberal Party, so if John would like to jump in cold, he is welcome to.

Hello, John. We've been looking at the government's response to the committee's report.

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

Yes, and thank you for being here. I have to collect my thoughts very quickly.

First of all, the government indicated that they agreed with recommendation 16, that the government provide better online resources. What's the timeline for the provision of these resources?

[Bill Matthews]

We haven't actually nailed down the timeline. We're still looking at what tools would be best available, because they do need to meet certain standards and be web-based. We're still working on that.