Government Operations Committee on March 9th, 2016

[The Chair, Conservative, Tom Lukiwski]

Ladies and gentlemen, I will call the meeting to order.

Welcome to the fifth meeting of the Standing Committee on Government Operations and Estimates.

A reminder to all members that the proceedings tonight are televised.

It is my pleasure to welcome Minister Brison.

Minister Brison, I understand you have an opening statement, and perhaps you could also introduce some of the officials with you.

[Scott Brison, Liberal, President of the Treasury Board]

Thank you, Mr. Chair. I'm delighted to be here with you tonight, and with members of the committee.

We're going to be focusing tonight on supplementary estimates (C). I look forward to the discussion.

The mandate of this committee is to study the effectiveness and proper functioning of government operations, the estimates process, as well as the expenditure plans of central departments and agencies.

The Treasury Board is quite central to the work of this committee, so I'm looking forward to having a good working relationship with members of this committee. I'm delighted to be here tonight with Joyce Murray, our parliamentary secretary; Bill Matthews, the Comptroller General of Canada; Brian Pagan, the assistant secretary of the expenditure management sector at TBS; and, Renée Lafontaine, the assistant secretary, corporate services sector, and chief financial officer.

After my remarks, we'd be happy to take any questions you may have.

Let me first talk about the overall estimates process.

As you know, the government prepares estimates to request Parliament's authority to spend public funds. The slide on page 3 shows this process.

I believe each of your offices was provided with a deck that has that information.

The main estimates and the supplementary estimates (A), (B), and (C) provide information on the planned spending for each department and agency.

Main estimates must be tabled in the House of Commons no later than March 1.

The supplementary estimates present information to Parliament on spending that was either not sufficiently developed in time for inclusion in the main estimates, or that has since been refined to account for new developments in programs or services.

Later in my remarks I would like to get back broadly to the estimates process to highlight how we believe it could be improved.

I would like to turn now to government-wide supplementary estimates (C). I want to put these estimates into context by going back to the 2015-16 supplementary estimates (B), which are presented to the committee of the whole in December.

Giving the timing of the election in October of last year, the fall parliamentary session opened much later than usual, and most parliamentary committees had not yet been struck.

Out of respect for the newly formed Parliament, the fall supplementary estimates (B) only included the most urgent items that could not be temporarily cash-managed within existing authorities. As a result, there are more items in the supplementary estimates (C) tabled on February 19 than we would normally see.

The supplementary estimates (C) provide information to support the government's request for Parliament to approve $2.8 billion in voted appropriations for 58 organizations. These funds are needed to continue government programs and initiatives.

Page 4 of the deck highlights major items over $100 million, and they include $435 million to restore financial health to the service income security insurance plan, SISIP, which provides long-term disability benefits to Canadian Forces members.

There is also $216 million related to military support for Canada's assistance to Ukraine and to operations against the so-called Islamic State in Iraq and Syria.

There's $176 million for employment and social development to write off debts owed to the crown for unrecoverable Canada student loans.

There's $168 million for the green climate fund, $147 million for the resettlement of Syrian refugees, $121 million for Global Affairs Canada to cover foreign exchange adjustments and also some contributions to international organizations. There's $116 million for the construction of three offshore fisheries science vessels for the Canadian Coast Guard.

With respect to my own Treasury Board supplementary estimates, the department is seeking Parliament's authority for an additional $511.9 million. That includes the $435 million for disability benefits for Canadian Forces members, which I referenced earlier, SISIP. It also includes $34 million to establish a contingency to cover any increase in expenditures under the public service health care plan.

As well, there is $42.7 million in vote 1 for program expenditures, which mostly come from other government departments, to support Treasury Board-led government-wide back office transformation. This amount is offset by funding transferred from TBS to Shared Services Canada for IT infrastructure costs related to workplace renewal.

Finally, let me say a few words about transparency.

We are firmly committed to providing Parliamentarians with the information they need to monitor and review government spending. Right now the system does not enable us to reach this goal because of difficulties with the timeline. Given the timing issues, determined in part by House Standing Orders, the budget items for a given year are not reflected in the main estimates for the same year.

The current system is not transparent. The current system is, in my view, not functional or effective if the objective is that parliamentarians can hold government—I don't care which government, whether this government or a future government—to account. We aim to change that, and we look forward to working with you as part of this process.

The current system results in Parliament being asked to approve departmental spending plans without complete information on what the departments are actually planning to spend.

We understand that when it comes to the process of approving and reporting on government spending, this misalignment of the budget and estimates processes and the public accounts is an ongoing source of confusion for Parliament, the media, and Canadians. Some governments—we may hear more particulars later this evening—such as the Australian government have reformed their estimates and budget processes in a way that is more rational and effective if the objective is for Parliament to be given the information it needs to do its job.

These are problems that make it much more difficult for the Parliament of Canada, all members of Parliament regardless of party, to scrutinize government spending. Simply sequencing the main estimates so that they're presented to Parliament after the budget rather than before is, I believe, an important first step to better providing more complete and useful information to Parliament.

I want to work closely with parliamentarians and other key stakeholders and experts to achieve greater transparency and would welcome an opportunity to engage this committee. In fact, a few weeks ago we had a session for parliamentarians of all parties. MPs and senators from all parties were there to discuss potential opportunities to reform the budget and estimates process. Over 70 parliamentarians participated in that.

My officials are currently preparing a discussion paper on the subject of estimates alignment, which we'll be able to share with this committee. I'd welcome the opportunity to return in the future to have a more fulsome discussion on that. I know committees set their own agendas, but we would really appreciate your input on this in terms of looking at models that work better than the one we have now and ways we can improve accountability.

We've already taken some concrete steps to improve transparency in these supplementary estimates by reporting on government lapses.

I draw your attention to page 6 of the presentation. For the first time, there is actually now an online annex. You can go to the Treasury Board website to the supplementary estimates. There's an online annex to the supplementary estimates, which provides Parliament with an early indication of the lapses expected for this fiscal year. We can discuss this further.

I know you want to talk about frozen allotments. I know that's exciting. Lapses and frozen allotments are something that get all of us really excited. It is an important issue and we can return to that.

I will tell you that it was a significant step to actually make public online this annex that lists the frozen allotments. This is a significant step forward that was recognized by the parliamentary budget officer, who said:

The publication of these frozen allotments a full ten months prior to the Public Accounts of Canada represents an important increase in fiscal transparency, ensuring that parliamentarians are on a less unequal footing with the Government.

To paraphrase, it puts you on more equal footing, to eliminate a double negative.

We appreciate the support of the parliamentary budget office on this. As we move forward, we intend on taking further steps to provide more details and more useful information in a more useful format to parliamentarians.

On that note, I'll conclude my remarks. I look forward to our discussion this evening, Mr. Chair and members of this committee.

[The Chair, Conservative, Tom Lukiwski]

Thank you, Minister. I have a quick comment. I appreciate, and I think all members appreciate, your comments and your willingness to work with this committee, particularly in a shared concern to reform the budgetary and estimates process. You will find, as I have, that the members of this committee are not only extremely bright and well informed but they are also extremely engaged.

I believe you'll have a great time working with this committee. I'm sure that you'll find, during questions, that their level of knowledge and engagement will be apparent, which is a nice segue into the first round of questions, which will be a seven-minute round.

We'll start with Madam Ratansi.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you, Minister Brison, for being here. I was looking at your mandate letter and you have a huge mandate to fulfill. You have 11 priorities. I know that your goal is to lead the management agenda of the government.

One of the things you talked about is transparency and accountability. I appreciate the fact that you're trying to align both the estimates and the budget process. I was looking at annex B, which talks about cash versus accrual accounting. It confuses the living daylights when your public accounts are in a cash basis and something else is in an accrual basis. While your department is looking at things around making the cycles similar, could we please look at accrual accounting because those are the international financial standards, and accountants read financial statements that way and it's easy to explain.

Treasury Board is requesting $43 million-plus for the back office transformation initiative. My question would be about your desire to make operations move toward information technology, so that data is available, open, etc.

What are some of the challenges that Treasury Board will face, or has faced, as it moves toward that back office transformation? How can we avoid the problems that Shared Services is facing, for example, where the RFP process is not very transparent sometimes or it's not very well done?

I know that within your mandate you have to work to establish new performance standards with ministries like Public Services and Procurement. The minister will be coming tomorrow.

Could you give me some idea of how you're moving toward it, what challenges we face, and how can we make the process more accountable going forward?

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much, Ms. Ratansi. You're a chartered accountant as well.

The question, first of all, of cash versus accrual accounting is an important one. I mentioned earlier this evening the Australian example of a country that in my opinion has done a good job of reforming its budget and estimates process to render it more transparent and accountable to Parliament.

One thing they did was move to similar systems, with accrual accounting across the board. There were problems with that. They ran into issues and ultimately reversed some of that change. In our work, as we look at options together, I'm open to the Australian model. It is an example of something I haven't said we won't do, but it is something that they ran into issues with.

I may ask Brian to speak to some of the challenges they had with the Australian model. Then I'll answer the second question.

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

We have a number of issues that we would like to address with parliamentarians in terms of better alignment of the budget, the estimates, and the public accounts documents. Currently, we can say that the documents are aligned in the sense that the budget, in volume I of the Public Accounts, is on an accrual basis, and the estimates, in volume II of the Public Accounts, are on a cash basis.

When we look at experience in other jurisdictions, we believe that there is some merit in that, but we understand that there are differing views and would be happy to work with parliamentarians to better understand those.

As the minister said, we have looked at Australia, where there was was a significant problem. Unexpended accrual envelopes grew and considerable sums of money were accumulated without being spent for the purpose for which they were intended. That in itself is obviously a problem.

In the minister's reference to the estimates after the budget, we believe that if we can just get that very simple thing right, a whole bunch of other things with respect to these documents will be more coherent and more transparent, and therefore we will be better able to have those discussions.

We'll be returning to the committee to talk about that.

[Scott Brison, Liberal, Kings—Hants, NS]

On the whole issue of back office transformation, enterprise-wide solutions are difficult, whether you're in a big company with a lot of divisions or in a government. The challenges at Shared Services that occurred under the previous government are not unique, so I'm not being partisan. These are difficult files. Because we at Treasury Board are a central agency that works across departments and agencies, as part of our mandate we work to establish good governance around these things, but it is not easy when you're trying to implement and procure enterprise-wide, particularly IT solutions.

All government procurement is murky; government IT solutions are murkier. I'd say defence procurement is probably the toughest file, but it's always a challenge. It's one we're engaged in very actively, because modernizing back office support and transforming the back office and IT solutions is not an option; it's something we have to do as a government to modernize and improve the services we provide to Canadians and the value we provide through those services for taxpayers.

We have to do this. It is a challenge the previous government faced; it's a challenge every government faces in managing this. Treasury Board is at the centre of it, and we take it very seriously, but it does take investments.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

I have a question, just quickly.

[The Chair, Conservative, Tom Lukiwski]

Make it a very brief question.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

You need to institute proper budgeting, because accrual accounting is based on.... You made a statement that you are asking us to approve departmental estimates, without our knowing what the departments are doing. I think it is important that the departments budget properly, and then accrual accounting would help. Sheila Fraser would be an excellent asset.

[Scott Brison, Liberal, Kings—Hants, NS]

I agree with everything you just said, Ms. Ratansi. It is something we should look at. As we're reforming the budget and estimates process, I don't want perfection to be the enemy of the good. If we can identify some concrete steps we can take to make things better, we can do a full portfolio of changes in the future. But I want to make some concrete changes to get things better before the next budget year.

[The Chair, Conservative, Tom Lukiwski]

Thank you, Minister.

Mr. Blaney for seven minutes, please.

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

Thank you, Mr. Chair.

I welcome you, your officials, and your parliamentary secretary to this Committee meeting, Mr. Minister. It is a pleasure to have you here. It is also heartening to know that you want to work collaboratively. You can count on us to play a constructive role as the opposition.

In regard to the changes, I would say that it will be important to convince us of the need for those changes. If I look at, for example—and that brings me to my question, Mr. Minister—the Update of Fiscal and Economic Projections, 2015, which gathers government data, it is clear that there is a positive budget balance of $1.9 billion in the 2014-15 fiscal year.

You are just starting a new term in office, Mr. Minister. At this point, it is important to know that we are on the right track. In your election platform, you made it clear that in the short term you would post a modest deficit of less than $10 billion over the next two fiscal years, to make investments in infrastructure and Canada's middle class. You expected to return to a balanced budget in 2019.

I see headlines here.

I have an article from February. The headline says, “Federal Deficits Could Exceed $52B Over 2 Years, If Liberals Keep Their Promises”.

Also, the headline from a National Bank study says, “Liberal deficits could total $90B after 4 years”.

Mr. Minister, you are the guardian of the taxpayer. You're the one who says “no”, and you're also the one who signs the cheques.

We would not want you to develop tendinitis from signing cheques, since the sun will set on your sunny ways and the taxpayers will be the ones to pay the price.

I do have a question. At the dawn of your new term in office, you play an important role. Are you prepared to meet the commitment you made in your platform, and respect the opposition parties, which, as you know, want a balanced budget? I would like to hear your thoughts on that, Mr. Minister.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much, Mr. Blaney. I appreciate your question and I am very pleased to see you have our election platform. It is an outstanding document.

We may not agree on that, but we still inherited a deficit from the previous government. Clearly, we also inherited a situation that requires us to create economic growth. Since 2011, our economy has seen anemic growth. For us, the priority is to make significant investments to renew our infrastructure across Canada, and to strategically invest in the middle class to create jobs. Economic growth is a priority for our government and we will work on it. That will be front and centre in our budget; that is exactly what we will do in the budget. It is important to recognize that the former government—your government—increased our national debt by $150 billion. We will make different decisions and invest strategically to boost economic growth.

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

Mr. Minister, it is true that during the economic crisis, our government made investments, with the agreement of the opposition parties, including the Liberals.

However, how can you claim you inherited a deficit? Data from the finance department shows that there was a budget surplus of $1.9 billion. At the time you took office, the budget was balanced. You committed to run modest deficits. Can you commit this evening, as president of the Treasury Board, to safeguard the interests of taxpayers? The taxpayers in my riding, as well as business people, are worried, Mr. Brison.

We must also think of our children. Sustainable development means that we will not saddle them with a system that is not sustainable. It has come to the point where we will be borrowing to buy groceries. This is what you will do, and this is not sustainable development.

You are the one who can act as the government's control valve. You can say that you have to meet your commitments. Indeed, this was in your platform, which was why you were elected. Of course, only 41% of the population voted for you, which means that 59% of the population said they did not want a deficit.

A $10-billion deficit is bad enough, but according to the headlines, you are on a slippery slope, Mr. President of the Treasury Board. Are you ready to take on your role as guardian of taxpayers' interests and guardian of the commitments made by the Liberal Party during the last election campaign?

I repeat, at the end of the year we had a $1.9-billion budget surplus. I can table the document; it is available online, on the Finance Canada website.

[The Chair, Conservative, Tom Lukiwski]

I know it might be difficult, Minister, after a lengthy preamble like that, but please give as succinct an answer as you can.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Blaney is a good guy. I like him a lot. We work out together at the gym, once in a while.

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

It shows a lot, doesn't it?

[Voices]

Oh, oh!

[Scott Brison, Liberal, Kings—Hants, NS]

It's why we're so strong. We have big muscles, Mr. Blaney and I. We're tough guys.

Mr. Chair, it is very important to recognize that such experts as David Dodge, Kevin Lynch, and Larry Summers, former U.S. Treasury secretary, agree with us and say that we need to invest now, particularly in this time of anemic growth.

We're investing strategically. We will invest strategically. You'll see that in the budget. We will do so in a disciplined way. We will grow the economy. We will invest in the middle class. We've committed to that. We believe in that. The OECD and some of the top economic thinkers in the world agree with us.

I very much welcome Mr. Blaney's questions today, and look forward to further conversations on this.

[The Chair, Conservative, Tom Lukiwski]

Thank you, Minister.

Mr. Weir, seven minutes, please.

[Erin Weir, NDP, Regina—Lewvan, SK]

Thank you, Mr. Chair.

We've had some broad questions about the overall fiscal framework. I'd like to focus on a couple of specific areas.

As the Treasury Board is undoubtedly aware, the Global Transportation Hub near Regina is mired in a controversial land deal that saw this crown corporation pay more than twice what the land was worth to sellers with connections to the governing SaskParty. There have been calls for an RCMP investigation.

In Monday's adjournment debate, the parliamentary secretary for transport confirmed that her department had provided $27 million to the Global Transportation Hub, but did not seem particularly concerned about how the money was spent. Today's Globe and Mail reports that the Treasury Board has placed Transport Canada under special oversight. Will that include an investigation to ensure that federal tax dollars were not wasted in a suspicious SaskParty land deal?

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much, Mr. Weir.

You worked at Treasury Board at one point or another.

[Erin Weir, NDP, Regina—Lewvan, SK]

That's true.

[Scott Brison, Liberal, Kings—Hants, NS]

I think Mr. Blaney worked at Public Works, my old department, a long time ago.

First of all, I want to broadly address the issue of Transport Canada's operating budget. We're working closely with Minister Garneau on this, and he will respond to specific questions related to Transport. I'm certainly willing to speak with Minister Garneau about that.

Treasury Board, particularly our comptroller general, Mr. Matthews, is engaged across every government department and agency, with which we work closely. Like me, Mr. Matthews is a Dalhousie University graduate. He has a commerce degree so he must be a smart fellow. We work closely with departments and agencies with the objective of establishing strong financial governance and identifying potential issues.

Would it be all right with you if I were to check into that, work with my colleague minister, and get back to you?