Government Operations Committee on June 19th, 2018

[The Chair, Conservative, Tom Lukiwski]

Colleagues, I'd like to convene the meeting now. Even though we haven't got a full complement of committee members, we do have quorum.

I have a couple of notes before we begin. Because we have votes, our meeting will be shorter than usual, but I will attempt to get in a full round of questions within the first hour. That means the full seven-minute, five-minute, and additional three-minute rounds of questions. That should allow us enough time to deal with the little bit of committee business in camera, which I would like to deal with. We might have to sit a few minutes past 1:00 p.m. to get that all in, but I think we should be able to accommodate everything we need to accomplish today.

Mr. Pagan, welcome to you and your associates. I understand through a brief conversation prior to votes that you have a very brief opening statement, following which we will go immediately to questions.

Mr. Pagan, please go ahead.

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

Thank you, Mr. Chair.

I am happy to be here again.

Today I am going to talk about program-based parliamentary control and about our pilot project with Transport Canada.

I'm joined by my colleague Marcia Santiago, and by André Lapointe and Karen Cahill from the Department of Transport Canada.

Mr. Chair, as you know, the President of the Treasury Board presented the committee with a discussion paper on estimates reform in the fall of 2016. That proposed reform agenda had four pillars—timing, reconciliation of scope and accounting methods, vote structure, and enhanced reporting. We're here today to explain how we approached the third pillar of that agenda—that is to say, vote structure—through a pilot project with Transport Canada. We'll share what we learned and seek the committee's thoughts on where to go from here.

As you know, Parliament controls appropriations by the nature of the planned expenditure—that is, through distinct votes for each department by the nature of the input: capital, operating expenses, and grants and contributions. There are currently 200 separate voted appropriations approved by Parliament.

However, parliamentarians have also called for a program-based control structure that would strengthen the link between departmental programs and voted funds. This was a specific recommendation of this committee, of OGGO, in 2012. The president's discussion paper on estimates reform responded to the spirit of that OGGO recommendation by proposing a purpose-based control structure based on the Treasury Board results policy, and through this pilot project Transport Canada is testing a form of purpose-based control of its grants and contributions vote.

Mr. Chair, that's basically the issue before us. Parliament is currently appropriating funds by input, operating capital, grants and contributions. We have a new structure in place now, the departmental results framework that I presented to this committee some weeks back, which would present an alternate way of presenting information to Parliament for its appropriations.

As a very simple example, I have cited my own department, Treasury Board Secretariat. We currently have a single program expenditure vote for the department, and that's for $233 million, but our core responsibilities are broken out according to our role as the expenditure authority of government, the employer of government, our responsibilities for administrative policies, and regulatory oversight. There is an option going forward to have Parliament take our appropriation requirements and appropriate funds on that basis.

Mr. Chair, that is essentially the issue before us. We have a lot of information here about how the pilot was structured and what the department experienced in terms of challenges and benefits, and we'd be happy to speak to that by responding to questions from the committee.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much for your brief comments.

We will now go into questions, and our first seven-minute intervention will be from Mr. Peterson.

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

Thank you, Mr. Chair, and thank you, everyone, for being here today.

We're continuing, as you know, our review of the new process that we see under estimates reform. I just have a few questions and, Mr. Pagan, I'm going to start with you, probably not surprisingly.

Just to get some context, I'm just trying to find a quote here. In February 2018, the chair of the Standing Senate Committee on National Finance told Treasury Board officials, “purpose-based votes are clearer, and we would like you to expand the project”. That, to me, seems like an endorsement, but I think some prescriptive measures are also indicated in that statement. Has TBS taken any steps following the chair's comments on that at that Senate committee in February? If so, what are those steps?

[Brian Pagan]

Thank you, Mr. Peterson.

We're well aware of the Senate committee's interest in this area and specifically with respect to how the results framework—the new Treasury Board policy on results—could be used as a basis of parliamentary control. We have not proceeded any further than the current pilot project simply because we are looking to first assess whether this is meeting parliamentarians' needs and then to discuss some of the advantages and disadvantages of that project.

To be very clear, I'll draw the committee's attention to the deck that was prepared as background for this meeting. On page 5 of that deck, we present the main estimates for Transport Canada. We see that in 2015–16, before the pilot project, Parliament approved $683 million in grants and contributions through Transport Canada's vote 10. Within that single vote, there were six different grants and 20 different contributions. The department was able to manage the requirements in that single vote.

As a result of the pilot project in 2016–17, we disaggregated Transport Canada's requirements by purpose. We had a separate vote for grants and contributions related to gateways and corridors, totalling $258 million; a separate vote for grants and contributions related to transportation infrastructure, of $103 million; and a third vote, which was an aggregate of smaller requirements.

This is exactly what we mean by purpose-based votes. We disaggregated the one big number according to the purposes of the department. In our view, that provides a line of sight based on the specific purpose of the program, and it provides ongoing information throughout the year.

On page 6, we see that in 2016–17 there was a difference between what was authorized—$437 million in votes—and what was actually spent, $312 million. You can break that out by the lapse. We see that the biggest lapse—$101 million—was in the biggest vote, which was for gateways and corridors. There, $258 million was approved and $157 million was spent. That will introduce questions about the program dynamics, in that it was not able to expend the money authorized by Parliament.

This is exactly what we mean by purpose-based control. We are disaggregating a big number by the purpose of the program so that there is an enhanced line of sight in reporting in this area.

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

Thank you for that.

I take it from this example that as parliamentarians, perhaps we should first turn our eyes to the lapse when we're doing the review. If a lapse seems to be a significant part of the authorized amount, should that present a red flag to us as parliamentarians reviewing this?

[Brian Pagan]

That's a terrific question.

The purpose of the estimates is to provide authorities up to a certain level, and then there will be circumstances as the year unfolds that will impact a department's ability to deliver a program or service. It's important to understand what those factors are. They can be contractual delays, negotiations with third parties such as provinces or other jurisdictions, or issues in terms of hiring staff or filling positions. These are all important considerations that need to be understood in terms of ensuring that there is ongoing attention to the delivery of programs and services.

The lapse number in and of itself is not necessarily a problem if there is a good and valid reason that the money wasn't spent. However, it can be a red flag if there are issues with a department's ability to deliver on contractual agreements, to conclude negotiations with third parties, or to hire staff. This information is simply presented for ongoing discussion and review by parliamentarians.

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

Presumably, sometimes parts of the lapse would be beyond the control of anybody in the federal government—

[Brian Pagan]

Absolutely.

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

—but sometimes they would not be. When it's in the control of the federal government, we have to drill down to find out what we ought to do about it to correct the problem.

[Brian Pagan]

Exactly.

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

How much time do I have, Mr. Chair?

[The Chair, Conservative, Tom Lukiwski]

You have one minute.

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

Monsieur Lapointe, you're the ADM and CFO of Transport Canada, right?

[André Lapointe, Assistant Deputy Minister, Corporate Services and Chief Financial Officer, Department of Transport]

That's correct.

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

During the pilot project, what results did you see on this new purpose-based voting? Did you see any impact on the financial management practices of Transport Canada as a result of this pilot project?

[André Lapointe]

In terms of results, it didn't have a huge impact on us. It was relatively simple to implement. It was low cost, although we had to train up a few people. The votes became a little smaller, as opposed to having a large envelope, so if we had to reallocate during the year within those votes, we were limited to that box, if you will. We had to watch and be very diligent about what we could move and when. It was mostly a timing issue.

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

Okay. Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Tom Lukiwski]

Mr. McCauley, you have seven minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you, Mr. Chair.

Welcome back, Mr. Lapointe and Ms. Cahill. Mr. Lapointe, I want to continue Mr. Peterson's questioning with you.

You just talked about moving money. Can you give us an example of how that would have been different from before? Just round it out for us.

[André Lapointe]

Sure. For example, we have some small programs of $1 million and $800,000. In some cases for those that are demand-driven and application-based, we will get a surge in one year and we'll want to accommodate that surge. In order to do that, we'll take a surplus from another program, but it has to remain within the vote.

Previously, we had large infrastructure programs in which we could reprofile funding, so the funding available for reallocation was—

[Kelly McCauley, Conservative, Edmonton West, AB]

Yes, so there was a change in the reallocation. What process did you have to go through, then, under the purpose-based voting when you talked about moving money around?

[André Lapointe]

The only—

[Kelly McCauley, Conservative, Edmonton West, AB]

Was it very similar or...?

[André Lapointe]

It was essentially the same, but the big difference was that we had to remain within the new vote, one of the three votes.