Government Operations Committee on Nov. 9th, 2017

[The Chair, Conservative, Tom Lukiwski]

Colleagues, it being 11 a.m., we will start the meeting now.

I have just one quick comment before we begin. We do have another committee coming in here at 1 p.m. sharp. We're going to try to get out of here, out of courtesy for our colleagues who will be coming behind us, no later than 1 p.m. If we adjourn slightly before that, all the better. We'll see how things go.

With us today we have witnesses from the Treasury Board Secretariat. Brian Pagan has been with us many times before.

Mr. Pagan, it's good to see you again. I understand you have an opening statement. If you care to commence, sir, and introduce those witnesses who are with you, we'll start the meeting immediately.

[Brian Pagan, Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat]

Thank you, Mr. Chair.

It is a pleasure to be here again. With me are my colleagues, Ms. Renée LaFontaine, chief financial officer, and Mr. Daryl Sprecher, senior director, expenditure management sector.

I will begin by giving you an overview of the 2017-18 Supplementary Estimates (B). I will then be pleased to answer your questions. The President of the Treasury Board will join us at about noon.

To begin, I will briefly describe the government's spending cycle. We will then look at how the Supplementary Estimates are structured, as well as the total amount of this budget, and the whole fiscal year.

We will also look at how these estimates reflect the priorities set out in the fiscal framework and in budget 2017. Before concluding, I will also briefly talk about planned changes to estimates for 2018-19. I have a presentation that has been made available to the committee, and that is the frame for these remarks.

As you'll see in that presentation, on slide 3, we depict the supply calendar for Parliament. The parliamentary calendar is organized according to three supply periods ending June 23, December 10, and March 26. Supplementary estimates are a normal part of the supply process, and these supplementary estimates (B) for the period ending December 10 present information to Parliament on the Government of Canada's spending requirements that were not sufficiently developed in time for inclusion in the main estimates that were tabled February 23.

On slide 4, we see an overview of the way in which the supplementary estimates document is organized. The first few pages of the tabled document summarize the authorities and the amounts submitted to Parliament for its approval. They give additional information on major items and on horizontal initiatives. As usual, the largest section of the tabled document details requirements by department and agency. Each organization displays its requirements by vote and initiative, and we have tagged these initiatives to the appropriate budget year as applicable. For instance, initiatives from budget 2017 are tagged as budget 2017.

The tabled document ends with the proposed schedules to the appropriation bill, which are based on amounts presented in these estimates. Additional details are also available on the online version of the document. We have added new detail in response to feedback from committees. For example, a graphical summary was provided for the first time in supplementary estimates (A). We have repeated that depiction of estimates.

When we appeared at this committee in March, Mr. McCauley asked if we could provide an Excel version of supplementary estimates. I am happy to report that, for these supplementary estimates (B), we have provided details by organization in Excel data tables on the Canada.ca website.

Finally, I would remind the committee that the TBS InfoBase is also available to provide you with more information on authorities and expenditures.

As we see on slide 5, these supplementary estimates provide information on $4.5 billion in voted budgetary appropriations for 71 organizations. The new funding supports many initiatives announced in budget 2017 as well as spending set out in prior budgets and confirmed in the fiscal framework.

These estimates also provide an update on forecasted statutory spending that has previously been approved by Parliament. The $395-million increase in statutory spending reflects adjustments for public debt charges, major transfers, and the cost of employee benefits associated with the initiatives funded in these estimates. It also includes a new statutory transfer payment for home care and mental health services, as announced in budget 2017.

Turning to slide 7, we see a summary of the major voted items, and more detail is, in fact, provided on page 5 of the tabled document. In these estimates, we've highlighted eight initiatives of $100 million or more. These eight initiatives total approximately $2.3 billion, which is slightly more than half of the voted amount in these supplementary estimates.

The largest item on the list relates to compensation adjustments for the public service following the ratification of a number of collective agreements. This funding will be allocated across government departments.

The next item, for National Defence, is an aggregation of the additions and subtractions, or the pluses and minuses, for 19 capital projects, including the Arctic and offshore patrol ship, and the tactical armoured patrol vehicle project. The third item is also from DND, and that reflects pay increases to Canadian Forces members.

The remaining five major items in the list cover a wide variety of programs and initiatives, such as humanitarian assistance, public service group insurance and benefit plans, a settlement payment to follow royal assent of the Cree nation governance legislation, fixed-wing search and rescue aircraft requirements, and a re-profile of funding for the new Champlain Bridge.

Turning to slide 8, we see a visual depiction or representation of the major spending themes in these supplementary estimates. As I mentioned, this is also available in the online version. As you can see from the slide, the largest item, $1.3 billion, relates to compensation and benefits across the public service, RCMP, and Canadian Forces. Government-wide compensation and benefits represent approximately 30% of the funding to be voted by Parliament in these estimates.

The second biggest item or theme is for National Defence capital projects, totalling $668 million, and this is related to four major projects: the aggregation of the re-profiles that I spoke of, as well as fixed-wing search and rescue aircrafts, and the light-armoured vehicle.

Other major themes include support for indigenous peoples at approximately $600 million, as well as innovation and federal bridges.

Slide 9 speaks to the progress that we have made in implementing budget 2017 initiatives. The committee will recall that budget 2017 was tabled in March, and that is after the main estimates, which were tabled on February 23. Accordingly, supplementary estimates (A), which were tabled May 11, presented the first opportunity to bring forward new measures announced in budget 2017 for parliamentary approval.

These supplementary estimates (B) before you today include 46 initiatives from budget 2017, totalling $1 billion, or roughly 22% of the supplementary estimates (B) requirements. With these supplementary estimates (B), we will have brought before Parliament approximately 76% of the spending measures in this year's budget. We would anticipate bringing forward additional funds related to budget 2017 as well as other government priorities in the final supplementary estimates of the fiscal year to be tabled in February.

Before concluding, I'll give an update on the estimates reform project. In June, a number of changes were made to the Standing Orders of the House of Commons, including a change to Standing Order 81, which deals with supply. As a result of this change, interim estimates for 2018-19 will be tabled for the first time in February. These interim estimates will support the first appropriation bill of 2018-19, and then a full main estimates will be tabled on or before April 16, which is to say after the budget, and will therefore create the possibility of including budget items in the main estimates.

To bring the budget and estimates even closer together, we are working with our colleagues in Finance to include information in the budget about new programs on a cash basis, and this development will support the possibility of including budget 2018 planned spending in the main estimates document to be tabled on or before April 16. As a consequence of this, we would anticipate not having a requirement for a spring supplementary estimates if, in fact, we are able to bring budget measures into the main estimates.

Mr. Chair, that concludes my presentation.

As to the next steps, in December, the government will introduce the supply bill for the Supplementary Estimates. The President of the Treasury Board will then table the 2017-18 Supplementary Estimates (C) and the first Main Estimates for 2018-19 in February.

Should you have any questions about the Supplementary Estimates, Ms. LaFontaine, Mr. Sprecher, and I will be pleased to answer them.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Pagan.

We'll start with our normal seven-minute round of questions with Mr. Peterson.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Thank you for being here with us today. I very much appreciate it, as always.

I have a few questions off the top dealing with the cycle, and obviously it's changing, I understand, from your comments and from what I believe the procedure will be.

We'll do supplementary estimates (C) in February under what I'll call the “old regime” for lack of a better phrase. Simultaneously there will be an interim for fiscal 2018-19 as well. As this committee we will have to be doing those at the same time, it's almost a double cohort then.

Do you see any problem with that or any confusion that might flow from that as we adjust from the old cycle to the new cycle?

[Brian Pagan]

As you know, we've presented some ideas to this committee in terms of ways in which we can simplify and make more coherent the estimates process, and we see this as a very positive development in terms of bringing greater clarity and coherence to what we're doing with it. The reality is that we have always, in the supply period ending March 26, presented both the final supplementaries for the year in which we're in, and the estimates requirements for the year ahead.

The confusion that has created is not in being able to sort out one fiscal year or another. The confusion has been that we've been presenting the future-year requirements in advance of the budget, and then we've had to catch up through the supply calendar with significant spending, billions and billions of dollars, in supplementary estimates.

For this year, in 2018-19 we will table supplementary estimates (C) that will conclude requirements of departments to deliver programs and services for this year, and the interim main estimates will simply be an extension of the existing authorities that have been approved by Parliament to this point. We'll flatline, if you will. If department X has $100 million, we will take a portion of that $100 million and make that the starting point for the requirements next year. This will have the additional benefit of eliminating some confusion about what we call sunsetting programs.

In the past, we've used...as an example, Marine Atlantic. The continuation of funding has been subject to a budget decision. With the budget coming after the main estimates, we've had no choice but to table a main estimates that does not assume the continuation of that funding. It has been perceived as a cut or a reduction, but in fact, it was not. It was a decision not yet taken that was confirmed by the budget.

By tabling our interim estimates in this way we will avoid any semblance of reductions. If there are to be reductions, they will clearly be articulated in the budget, and they will then be reflected in the main estimates that are tabled after the budget.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

When we do interims in February coming up, will that report be similar to what used to be the mains because that's what happens before the budget, if you follow what I'm saying? What currently, in the present cycle, or the old cycle, we'll call it...? When you did the mains, it was before the budget, so what informed the mains, and then consequent to that, is that the same information that will be used for the interim 2018-19 in February?

In other words, is the interim going to be akin to what the mains used to be?

[Brian Pagan]

It will. The key difference is that in the mains, we also provided a narrative explaining additions and subtractions. But because there are no additions and subtractions, because we're flatlining reference levels that have already been approved by Parliament, we'll simply present the fraction of that. Normally we present three-twelfths or four-twelfths of a requirement, with the narrative, the supporting detail, to follow in the main estimates once those additions and subtractions have been confirmed in the budget.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

When you do the interims for 2018-19, the budget will follow and then the mains will follow the budget.

[Brian Pagan]

That's correct.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

My speculation is that the mains going forward will be a much more informed and well-advised process, because the budget will have already been tabled.

[Brian Pagan]

It will have two benefits for us. The first is a reconciliation to the budget. I mentioned in in my opening remarks that we're working with finance to develop cash tables. The budget is presented on an accrual basis, and the estimates are on cash. We're working this year so that we'll have the budget projections on an accrual basis, but then the budget decisions will turn around and they will be reflected in cash terms. Department X will get $10 million for such and such initiative. Using that as a starting point for reconciliation, we would be able to replicate that table in the main estimates. There's a very easy crosswalk—same language, same numbers.

Then again, because the budget decisions would precede the main estimates, we would have an opportunity at Treasury Board to work with departments to approve programs and have them reflected in the main estimates for parliamentary approval.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Is this why you say the spring supplementary estimates will not be required going forward?

[Brian Pagan]

We anticipate that if we're successful in bringing the budget into the main estimates, that would obviate the need for spring supplementaries.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Do you predict there only being two supplementary periods, an (A) and a (B)?

[Brian Pagan]

That would be our intention.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you for that. That will help clarify things.

How much time do I have?

[The Chair, Conservative, Tom Lukiwski]

You have less than a minute.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That's perfect...well, perfect for Kelly.

I just wanted to roughly talk about the additional funds that are requested under the supplementary estimates here. I'm sure some of my colleagues will get into the actual.... I hope someone will follow up on this, because I don't think I'm going to give you enough time to answer.

I like how you broke it down on the slide. On slide 7, you have the eight bullets. On slide 8, is that the same spending, just categorized in a different manner, versus new spending?

[Brian Pagan]

On slide 7, we itemize by initiative, and then on slide 8 we aggregate. For instance, on slide 7, we see compensation adjustments for the public service at $654.6 million, and we also see compensation for Canadian Forces members at $333.1 million. That's the same theme. It's going to two different pots, but it's the same theme. On slide 8, we aggregate that and show you the impact of compensation, at $1.3 billion.

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, we have to cut it off there.

Mr. Peterson, when you said you didn't think you'd give them enough time for an answer, I can assure you that—

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I'm right once in a while, Chair.

[The Chair, Conservative, Tom Lukiwski]

Mr. McCauley, you have seven minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Somewhat following up on the theme of the labour, what percentage of the public service is covered by the $654.6 million for the compensation changes? That's for those signed between April and July. How many more do we have left to sign, and what are the ballpark financial obligations for the new ones left to be signed?

[Brian Pagan]

As of these supplementary estimates (B), we have reached agreement with 20 of the 27 bargaining tables. That totals 156,019 public servants, or 90% of the core public administration. There are seven tables still outstanding, and negotiations are ongoing with those groups. That would include, for instance, border guards and correctional service officers, who are probably the two largest groups.

[Kelly McCauley, Conservative, Edmonton West, AB]

A huge percentage of our public service is done.