Government Operations Committee on June 14th, 2016

[Greg Orencsak]

We would have a contingency allocated and appropriated in the Treasury Board Secretariat. It would be an overall contingency fund under the control of Treasury Board, which would allocate funding out of that contingency fund based on the needs that may arise during the year.

Contingencies are budgeted for in the case of unforeseen expenses and emergencies, for example, but it is a global amount. It's not allocated at the beginning of the year, department by department.

[Raj Grewal, Liberal, Brampton East, ON]

It's a one-line item in the estimates and one line in the budget as well?

[Greg Orencsak]

That's correct.

[Raj Grewal, Liberal, Brampton East, ON]

Okay. Excellent.

Does aligning vote to accrual affect appropriations and how the voting system works when the transition happens?

[Greg Orencsak]

Do you mean in terms of the voting on the estimates themselves?

[Raj Grewal, Liberal, Brampton East, ON]

Yes.

[Greg Orencsak]

It's a good question. I'm not entirely sure, as I wasn't in my position at the time that the transfer was made, so I can only speak to the current process, but I think voting on the estimates takes place fairly effectively and efficiently.

Our estimates committee selects certain ministries whose estimates it reviews more closely. The committee votes on each of these estimates, which are then reported to the full House. I'm not entirely sure about how that transition works, so I apologize for that.

[Raj Grewal, Liberal, Brampton East, ON]

No worries.

Was there a study done after the transition happened on the benefits of the transition?

[Greg Orencsak]

Yes, we have commented on that. We have in subsequent budgets.... In the 2010 Ontario budget, there was an addendum that was published that described our experience and the benefits of moving to a system of accrual accounting that aligned reporting requirements. It was a good synopsis of the journey we undertook.

I think that's important and practical, because public finances are always under a high degree of scrutiny, whether by legislators or the public, so it's important to have those kinds of reviews. We now have a financial accountability officer, which adds yet another layer of scrutiny. It's important to be able to demonstrate the effectiveness of the changes that governments make in this regard.

[The Chair, Conservative, Tom Lukiwski]

You have 30 seconds.

[Raj Grewal, Liberal, Brampton East, ON]

We've finished.

[The Chair, Conservative, Tom Lukiwski]

I think we'll go to two speakers on the five-minute round, and then we'll suspend while we excuse our witnesses and go into some committee business.

The first five-minute round will be Monsieur Godin or Monsieur Blaney.

Go ahead, Monsieur Blaney.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Thank you very much, Mr. Chair.

Thanks again for your comments, Mr. Orencsak.

You successfully transitioned from cash basis accounting to an accrual accounting system. Mr. Grewal gave us the example of perfect harmonization between the main estimates and cash basis. He said he was happy that a balance would be achieved.

However, unfortunately, given the budget presented to us by the federal government, we know that a balance will not be achieved and that we will have a deficit. We can't do anything about that. Fortunately, the Office of Parliamentary Budget Officer, created by our Conservative government, provides parliamentarians with relevant information on those issues.

I couldn't resist it.

You still had to go through transformations.

You mentioned in your report that a hospital had to switch to accrual school, so how did you make the transition? All the provincial departments had to follow your lead, so can you tell us how it was gradually implemented throughout the provincial structure?

[Greg Orencsak]

That's a great question that speaks to the breadth and the scope of the changes. Some of these changes followed the province's transition to accrual accounting. We consolidated hospitals, school boards, and colleges onto the province's books.

Obviously, that took, first and foremost, a close working relationship and partnership with our Auditor General in terms of looking at the appropriate control assessments for those entities to make sure that we picked the right entities to consolidate under Ontario's legislative governance and accountability frameworks.

As you know, there is some variation around that across Canada. Some provinces also consolidate universities, for example. We don't do that in Ontario, based on the control assessment that was done. That's something that we're obviously always looking at and that our Auditor General is looking at.

It takes a very close and effective working relationship with those funding partners to move to consolidate their results onto the province's books and financial statements. The Ministry of Education, the Ministry of Training, Colleges and Universities, and the Ministry of Health have those relationships. We rely on the work of those entities' independent auditors to report on their results, and then we consolidate those results onto our books.

Because the results are consolidated, I think governance and accountability become particularly important, because we don't want to plan for balanced hospital budgets, for example, if hospitals then report large deficits. We have to work closely with those partners to understand their financial projections and at times provide the means by which they can help achieve their financial commitments and outcomes so that we're not surprised at the end of the day when their results are consolidated onto our books.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

You had to kind of drill down the methodology to all of the parts of the provincial government and make sure that it was a uniform method of accounting throughout the different entities of the provincial government.

[Greg Orencsak]

Absolutely.

[The Chair, Conservative, Tom Lukiwski]

Sir, you've less than 30 seconds.

[Greg Orencsak]

I will be brief.

I think there are two sides to that coin. Obviously the mechanics have to align so that you can put the pieces together, but that doesn't guarantee the outcomes. We also need effective governance and oversight so that those entities are able to live within their budget by delivering on their plans.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Gentlemen, our final intervention will come from Madam Murray.

Madam Murray, welcome back to our committee.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you. I will be sharing my time with Mr. Drouin.

I want to follow up on the question that Mr. Grewal was asking about votes.

It's in terms of the appropriations for broad purposes. I'm not speaking about the actual act of voting, but the categories of approval. As an example, in Treasury Board, vote 5 is contingencies, and we just talked about vote 16 as government-wide initiatives, and vote 25 is operating budget carry forwards. Other ministries have their very broad categories of vote.

Do you have that same type of broad category, as opposed to appropriations that are linked to specific programs? When you shifted to the accrual method, did it affect the structure of appropriation in terms of votes that parliamentarians were considering?

[Greg Orencsak]

It's a great question. I have just a couple of comments.

Vote structures are not static constructs; they change with time. They change as programs are introduced or changed, for example, or when reporting and accounting centres change. We talked about the example of reflecting tax expenditures as a voted appropriation in our estimates.

The votes are reviewed and approved by our Treasury Board and they're done on a ministry-by-ministry basis. There isn't a general template for how a ministry's vote and item structure are put together. There is some flexibility and to some extent some varying level of detail in what those votes look like, but by and large, I think we have a fair bit of program-level detail associated with our votes. I don't have the number off the top of my head, but we have many, many votes in each of those ministries, so those general overarching categories of votes are rare or more unusual, and certainly not the norm.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Is there a downside around having too much specificity and a diminished ability to transfer among programs?

[Greg Orencsak]

As the votes get more specific, there is obviously a downside of less flexibility when you're looking to transfer money between votes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you.

To answer Mr. Blaney's questions, I would say that the reason may be that the Conservatives left us post-dated checks.

I have one quick question. I noticed that in the budget cycle, you have 12 days to submit the main estimates. What is the rationale for the 12 days?

[Greg Orencsak]

It's a good question. It's in our standing orders.

What is different from an Ontario perspective is that the estimates are developed in conjunction with the budget process. If we weren't able to do that, it would be very difficult to table estimates 12 days after the tabling of the budget and to make those estimates line up with the figures in the budget. The 12 days are a part of the Standing Orders. It has been like that for a while.