Government Operations Committee on Nov. 20th, 2014

[Mathieu Ravignat, NDP, Pontiac, QC]

Fair enough.

Thanks for that.

The additional amount include $56 million for operating expenses under vote 1b and $80 million in capital expenses under vote 5b. I just wanted to give you the reference.

Elsewhere in the supplementary estimates (B) 2014-2015, there is an internal transfer of $255 million between the operational expenses vote and the capital expenses vote, specifically for fit-up and capital leases related to the implementation of a common definition for the capital expenditures vote.

My question is very specific: which capital expenses will the $80 million requested be used for?

[Bill Matthews]

This is an interesting question.

I assume that you are talking about the Department of National Defence, correct?

Transfers between votes have to be approved by Parliament. This transfer actually relates back to an Auditor General recommendation from about two or three years ago. The Auditor General recognized that departments have capital votes and operating votes, but they weren't being consistent in terms of what got charged to their capital vote versus their operating vote. We wanted consistency on that front. The government took note of that recommendation and made the definition for capital vote the same as it is for accounting. That actually created clarity in the definition. That meant some departments had money that in previous years they were charging to their operating vote while really, under the new definition, it was capital. That's why you're seeing this transfer here: to conform to the new definition. DND has money in one vote that basically, under the new definition for capital, they have to move to the other.

I can't answer your specific question about which capital projects are involved, but this is really about cleaning up and making our practices consistent.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Mr. Ravignat. Your time is up.

The floor now goes to Mr. Adler, for five minutes.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Matthews and Ms. Santiago, for being here today. I have a couple of questions on the statutory expenditures on slide 10, in particular going first to the decreases.

The interest charges are $329.7 million. That's for servicing the public debt. Correct?

How does that relate to the year before? Do you have that information?

[Bill Matthews]

I can give you something.

That is the amount we're decreasing the forecast by. The actual interest charge on public debt, from the public accounts in 2013-14, was $28.2 billion in total. That's the total amount of actual expenditure in 2013-14.

This change in supplementary estimates (B) for the Department of Finance is indicating that they're decreasing their forecast by $329.7 million, and I'm hoping my friend Marcia has the total for us.

[Marcia Santiago]

The total forecast as of this point in the year is $26 billion.

[Bill Matthews]

It's $26 billion forecast, versus last year's $28.2 billion.

[Mark Adler, Conservative, York Centre, ON]

That's because, I suspect, the yield curve has shortened.

[Bill Matthews]

It's related to both long-term and short-term interest rates, but it's largely that long-term interest rates are staying low. You may recall that when the Department of Finance puts together its budget, it bases its interest rate forecasts on a survey of private sector economists. It redoes this periodically. The latest survey results show that they're expecting long-term interest rates to stay lower than we thought, and that's what is—

[Mark Adler, Conservative, York Centre, ON]

—reflected here. Thank you.

I want to move on to the disbursements to the provinces under the softwood lumber agreement. Eighty million dollars will be transferred to the provinces. I'm wondering what the criteria for determining that amount are based on.

[Bill Matthews]

Again, this is a decrease. We're actually forecasting that no money will be transferred to the provinces. Initially, Finance was forecasting that $80 million would be transferred under the agreement. Based on the forecast price of lumber, we're now forecasting a decrease of $80 million, which brings us to zero.

The criterion basically in play here is a formula. If you follow the U.S. housing market and lumber prices, when the price drops below $355 U.S. per 1,000 board feet, this agreement will kick in. That is what is driving this: they looked at the housing market in the U.S., at current prices and forecast prices, and they're forecasting that the price will stay above that amount of $355 U.S., meaning that there will be no need to actually pay anything out.

[Mark Adler, Conservative, York Centre, ON]

In the event that it does increase above $355, there's an uptick in U.S. housing....

[Bill Matthews]

If it drops below $355 U.S., then there's a formula by which the Government of Canada would basically settle up with the provinces.

This is just their best estimate at the time. At the current time we're forecasting none, but if the price drops, then....

[Mark Adler, Conservative, York Centre, ON]

Thank you very much.

Moving to the payments to International Development Association of $441.6 million and the decision to replace—this is a new way of doing it, as you indicated—demand notes that were previously used, is there any indication for the change? Was there an issue with the demand notes?

[Bill Matthews]

There wasn't a real issue from my perspective. This is just a bit of speculation, but demand notes are great if you're not really sure whether the money is going to be used: you put it out there, and if you need it, you need it. If you're pretty certain that they're going to require the money, you might as well just flow it. So from my perspective, this is simpler.

[Mark Adler, Conservative, York Centre, ON]

Okay, I understand.

I'm also curious about the establishment of the Canadian securities regulation regime, and the $115 million. Is that $115.82 million to run the transition office, or...?

[Bill Matthews]

No, it's actually.... That's an interesting question. Those are payments to two provinces that have agreed to effectively come on board. This represents one-time payments to Saskatchewan and New Brunswick, which are now part of this initiative. They have basically been funded on a one-time basis to acknowledge that they are now part of this process.

[Mark Adler, Conservative, York Centre, ON]

B.C., Ontario, and P.E.I., which had agreed—

[Bill Matthews]

—previously, I believe—

[Mark Adler, Conservative, York Centre, ON]

—were previously paid out. I see.

Thank you very much.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Mr. Adler.

We are back to Mrs. Day, for five minutes.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

Mr. Matthews, the Treasury Board Secretariat asked for $74.9 million under vote 1a in relation to an out-of-court settlement. Pat Martin asked if that was in connection with Royal LePage. You said that the case was before the courts and so you could not talk about it.

However, you said, and I quote: “At a subsequent meeting, I'll be able to offer up additional information on that front.”

Could you tell us about it now?

[Bill Matthews]

Yes.

Yes, I can. It has nothing to do with Royal LePage. It was, if I recall correctly, the White case. We knew what the amount was in supplementary estimates (A) but it hadn't been quite ratified by the courts yet. That has now been done and it relates to the White case. That matter is now wrapped up.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Can you tell us if it cost $74.9 million, as vote 1a indicates?

[Bill Matthews]

The amount ratified by the courts was exactly what had been agreed upon by the parties. So it was an exact amount.