Government Operations Committee on Nov. 20th, 2014

[Bill Matthews]

This is directly related to how estimates work. When we get the main estimates, which is how we start the year, any department that is going to spend money, which is all departments, would be on that list. As the year goes on, if departments get Treasury Board approval to spend new money and indicate they are capable of spending it this year, because we do resource departments year by year, you come into supplementary estimates. Supplementary estimates (B) is our biggest, but there are certain departments that had no items where they were requesting additional funds, so they are not included here. This means that they're status quo.

[Jim Hillyer, Conservative, Lethbridge, AB]

Could you also clarify what a horizontal item is?

[Bill Matthews]

The horizontal items—it's in the introductory section of the main estimates—are any items where multiple departments are receiving funding to achieve a common outcome.

I'll give you two examples. One is on the more complex side, and the other is fairly simple. The remediation of environmental liabilities and ongoing assessment involves nine departments, if I recall correctly. It's any department that is a custodian of a site, so Parks Canada could have environmental liabilities. National Defence does. That's a large effort. Then you have something as simple as CRA's implementing new tax measures. They need some IT help, which will be provided by Shared Services Canada. It's a very straightforward program with new tax measures, but there's an IT component that Shared Services Canada will get resources for.

[Jim Hillyer, Conservative, Lethbridge, AB]

So horizontal items are funding that goes to more than one department for the same project.

[Bill Matthews]

Yes, the same project.

It's been a keen area of interest for this committee in the past. If you look to the introductory section of the estimates, you will see the list of all the horizontal items and also an indication of whether it has received money before. The first nations water and wastewater action plan has received funding in the past, and you'll get the history.

[The Chair, NDP, Pierre-Luc Dusseault]

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

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

[Wayne Easter, Liberal, Malpeque, PE]

Looking at page 6 in the slides, does the number for National Defence include the major shipbuilding contract for the Irving shipyard in Halifax? If so, where's that at? My understanding of the project is that by this time there was supposed to be ships coming off the line, yet there hasn't been any steel cut although the Irvings have completely built the yard, the buildings, to get the ships built.

My concern, and the reason I ask the question, is that although this major contract has been let and it's over a number of years, if there are delays in terms of the shipbuilding, it throws off the shipbuilders' estimates and where their profitability might be. I'm just wondering where that's at.

[Bill Matthews]

There are two parts to the question.

Is there money in here related to the shipbuilding project on the east coast with Irving? My understanding is that the answer is no.

Where is that project at? My understanding is that they are continuing to nail down the best design before they actually start to cut steel. I believe those discussions are ongoing. It's certainly not an area that I'm an expert in, but my understanding is that they're still nailing down the design before they actually start cutting steel.

[Wayne Easter, Liberal, Malpeque, PE]

I think the original intent was to have at least the first ship off the line by now, and we haven't cut any steel. So the money for some of it wouldn't flow, as I understand it. How does that work?

[Bill Matthews]

This again goes back to Parliament approving money on an annual basis. We have talked about reprofiles here, where a department says, “You know what? We initially thought we would spend that money in this year, but we're not going to.” DND will be resourced for their expenditures related to those ships when they have a better idea of when the bills will come due. That's when you'll see the money flowing into DND's reference levels.

That being said, DND has a fairly large allocation for capital projects. It's a fairly big chunk of money there. They may be able to flow some money in advance of coming back for incremental resources, but the estimates themselves will be dependent upon an actual forecast of cashflow for the project.

[Wayne Easter, Liberal, Malpeque, PE]

As a last question on that point, in terms of the total expenditure for the product, $25 billion or $28 billion or whatever it is—I forget the amount, although Bernard might know it—if we are behind in the timeframe, as I'm told we are but I'm not 100% sure we are, then that unspent money wouldn't work like it does in some departments, where the money would lapse and go back to the consolidated revenue fund. The money would just move ahead, if I can put it that way.

[Bill Matthews]

If it ever made it into DND's reference levels, if they actually were going to spend money and said after they got the money, “No, we're holding now”, because it is a year-by-year thing, they would actually have some capacity to reprofile money on their own. But if—and this is a theoretical answer—they needed more money moved from one year to the next, there would be a discussion with the Department of Finance.

I think Marcia may want to add something here.

[Marcia Santiago]

When a department doesn't use all of its appropriation in a year, it actually does revert entirely to the consolidated revenue fund. What happens is that there are mechanisms through the appropriations that allow us to bring in a corresponding amount of money in the following year, or in whatever year they actually need the cash. But there is a conversation with the Department of Finance, because it is a new fiscal charge.

[Wayne Easter, Liberal, Malpeque, PE]

That's the detail. Thank you very much.

On slide 10, and this is partly related to the question that Mr. Hillyer asked, it says “lncentive for provinces to eliminate taxes on capital $95.0 million”. Can you explain what that means?

[Bill Matthews]

Basically, related to economic development one of the issues the government has been pursuing is to reduce capital taxes. Finance is better positioned to give you details on this, but there's enough evidence that reducing capital taxes stimulates investment. There have been ongoing discussions between the Department of Finance and the provincial counterparts about eliminating their capital tax.

[Wayne Easter, Liberal, Malpeque, PE]

Okay, I follow you now.

[Bill Matthews]

If a province eliminates a capital tax, obviously the revenue drops, so we compensate them for that.

[The Chair, NDP, Pierre-Luc Dusseault]

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

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

[The Chair, NDP, Pierre-Luc Dusseault]

We are back to Mr. Trottier, for five minutes.

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

I want to follow up on some of the horizontal items that you mentioned in your presentation. I'm trying to understand the mechanics of why you're coming back to Parliament to request some appropriations for them. The ones I'd like to focus on are related to research and development.

On page 1–19 of the estimates themselves, you talk about funding to support the Centres of Excellence for Commercialization and Research. There's an appropriation of $20.277 million being requested.

On something like this, why is there a need to come back to Parliament in supplementary estimates (B) to request additional funds? It seems to me there's a program that's been laid out. What happens that you need to request additional funding at this time?

[Bill Matthews]

This funding for this organization was not in the main estimates, if I recall correctly, because they hadn't been backed through Treasury Board. Sometimes the timing doesn't line up. In the interim, Treasury Board has actually approved this program. We know who the award winners are. These organizations are now in a position to flow those funds. So it's a timing issue.

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

It's a similar issue then with the genomics research, and you also mentioned the Canada excellence research chairs.

[Bill Matthews]

Yes.

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

It's just a timing issue. The program was started perhaps sometime in 2013—