Government Operations Committee on Oct. 24th, 2016

[The Chair, Conservative, Tom Lukiwski]

Colleagues, thank you for your attendance. For most of my colleagues, it's kind of like Groundhog Day—we're seeing you again. I didn't think we'd see each other this soon, but welcome back.

Welcome, Mr. Graham, Mr. Ayoub, and Mr. Grewal. It's good to see you back at the table again.

Welcome, Minister. I know we have only an hour, so I will, without further ado, turn it over to you and perhaps you can brief our colleagues around this table as to the purpose of your visit, and get right into your presentation.

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

Thanks, Mr. Chair.

This is actually my twelfth appearance at either a Senate or a House parliamentary committee since the swearing-in of the new government last November. I'm delighted to be here.

I am pleased to have with me from my department Yaprak Baltacioglu, the secretary of the Treasury Board; Brian Pagan, the assistant secretary of the Expenditure Management Sector; Marcia Santiago, from the Treasury Board Secretariat; and my colleague Joyce Murray, Parliamentary Secretary to the President of the Treasury Board, from our department.

To have the opportunity to be here again is great. Since we last met, there has been significant progress made, as evidenced in the paper provided to you.

This committee has played an important role in budget and estimates reform for some time, going back to 2012, with the report “Strengthening Parliamentary Scrutiny of Estimates and Supply”, which provided a very thoughtful analysis and recommendations that have helped serve as a road map on estimates reform. In fact, a number of the steps already taken have been in response to that report and its recommendations. These included the creation of a searchable online database known as InfoBase, which has been recognized by the PBO as the authoritative source of government expenditure information; a pilot project with Transport Canada to test a new program-based vote structure; and the identification in estimates documents of all new funding according to the associated budget document to make it easier for parliamentarians to follow that.

We continue to move forward with this agenda, most notably on the question of budget and estimates timing and alignment, and I want to speak with you briefly on that this morning.

The ability to exercise oversight over government spending is the most important role that we as parliamentarians can play in representing Canadians.

However, the current practice makes it difficult for MPs to carry out that function. Having been an MP for many years, I too have been dissatisfied with the various elements of the estimates process.

The other night in a briefing, which some of you attended, I noted that on June 2 I will have been a member of Parliament for 20 years. By that time, I will have been three and a half years in government, and 16 and a half in opposition, so my perspective on some of these things is shaped not simply by having been a member of a government but also a member of Parliament. That's one of the reasons I'm excited to discuss with you the government's vision for estimates reform.

Change in this area is not easy. In fact, Robert Marleau, former Clerk of the House, noted that the form and content of the main estimates has been modified on only four occasions since Confederation, most recently in 1997. Clearly, there's a lot of work to be done in terms of strengthening the ability for Parliament to hold government to account.

I firmly believe the vision we're proposing will help address the many issues raised over the ineffectiveness of the estimates process in Canada. These include concerns of the Auditor General, who underlined the importance of better timing between the budget and estimates.

Our vision includes four areas that are currently the source of a lot of frustration for parliamentarians. To make things manageable and to achieve early progress, I would propose that we focus our attention on the first area right away. It deals with the timing of the main estimates in the budget and would require a simple change to the Standing Orders.

Once this important reform is implemented, we could take the necessary time to study and consider the other areas. I'd like to go through each area with the committee.

As I said, the first is in the area of timing of the main estimates and budget. Currently, the main estimates for the upcoming year need to be tabled in Parliament by March 1. In practice, this means that the main estimates can only reflect Treasury Board decisions as of January roughly, well before the budget actually comes out.

This timing affects parliamentarians, because the main estimates, which MPs are meant to scrutinize and to vote on, end up not reflecting the government's plans and priorities as outlined in the budget for the same year.

The other thing is that all the work that goes into Parliament's scrutiny of the main estimates is rendered basically irrelevant when the budget comes out. Wasting Parliament's time doing irrelevant work is not my idea of a priority. We need to fix that and make sure Parliament is engaged in meaningful work, including holding governments to account.

Therefore, we propose that the main estimates be tabled by May 1, instead of March 1, so that the main estimates can include budget items.

The second challenge is the differences in scope and accounting methods between the budget and the estimates.

The challenge here is more than accounting concepts. The budget represents the entire universe of federal spending. This includes consolidated accounts—for example, EI, and tax expenditures such as the new Canada child benefit. The estimates, meanwhile, support the more limited appropriation requirements of departments and agencies.

Nonetheless, parliamentarians need to be able to compare items in the budget and the estimates. The government will build on recent efforts to improve accrual planning in departments and reconciliation to cash appropriations in the estimates. There has been some work done on that in terms of reconciliation between accrual and cash accounting. We want to deepen that and expand it.

The third area is the difficulty MPs have in connecting the money we vote for with the program it will be used for.

Departments get their expenditure authority from Parliament on the basis of votes in the appropriation acts. These describe how funds are spent on items such as capital, operating, and grants and contributions. We'd like to focus more on why we're spending, and strengthen the link between the votes and the actual, specific programs they fund.

Lastly, many departmental reports are neither meaningful nor informative.

Every department within government has a lot of people writing reports that aren't that useful in terms of the quality of information and that not a whole lot of people read. In the same way that I said I don't think it's a good idea to waste parliamentarians' time unnecessarily, I think we're wasting a lot of good public servants' time writing reports that people aren't using because they're not formatted in a way that they're useful.

Our new Treasury Board policy on results will simplify how government reports on the resources it uses and the results it achieves. Reports will now tell people what departments do, what they are trying to achieve, and how they measure success, with an increased focus on metrics and measuring results and delivery, so that ministers, Parliament, and ultimately Canadians can hold government to account and have an understanding of the effectiveness of programs. ln addition, detailed information on program spending and the number of FTEs or people working will be provided in a user-friendly online database.

Mr. Chair, these are the broad outlines of our vision for fundamentally changing the estimates process so that MPs are better able to hold the government to account.

With that goal in mind, I look forward to the committee's engagement in driving the reform of estimates to benefit all of parliamentarians. I look forward to engaging, in the short term, on the alignment of budget and estimates timing.

Thank you very much.

I'd like to turn it over to Brian, who will go through a more detailed presentation of the proposed reforms.

[The Chair, Conservative, Tom Lukiwski]

Thank you, Minister.

Go ahead, Mr. Pagan.

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

Thank you, Mr. Chair.

As the president of the Treasury Board mentioned, the purpose of today's presentation is to explain to you the government's vision for estimates reform. We also want to explain how we plan to support parliamentarians more effectively by providing the best possible information for the purpose of approving government spending.

I have several slides to go through. I propose quite quickly to go through the four pillars as presented by the estimates. I'll present pillar one, the question of timing, and then perhaps pause for questions around that crucial element of timing.

As we see here in the outline, the proposed approach of the four pillars builds on recommendations from this committee, the 2012 study of OGGO on the estimates process, as well as our initial briefing with this very committee in February of last year, where we laid out the challenges around timing.

We believe that once we have the timing properly sequenced, we will be able to move forward with a better understanding of needs and requirements around scope and accounting, the vote structure of appropriations, and results and reporting.

The estimates are clearly essential to the proper operation of government. They form the basis of parliamentary oversight and control, reflect the government's spending priorities, and serve as the principal mechanism for establishing reports on plans and results.

However, parliamentarians have said on many occasions they are unable to perform their role of examining the estimates to ensure adequate control. That situation is attributable to the incoherent nature of the budgetary process, as a result of which budget initiatives are not included in the main estimates. Estimates funds are hard to understand and reconcile, and reports are neither relevant nor instructive.

Accordingly, the government sets out a four-pillar approach to fundamental change, beginning with the first step of changing the timing of the main estimates. As the president mentioned, taking this step will present a more coherent document and allow for the inclusion of budget estimates.

Then we can more easily reconcile the differences in scope and accounting methods between the budget and the estimates, ensure that vote structures for all departments reach parliamentarians, and reform the departments' annual reports so that parliamentarians are better informed about planned expenditures, expected outcomes, and actual outcomes.

Now I will discuss each pillar in detail.

The issue of estimates timing is very critical to any comprehension of the government's aspirations related to the budget and Parliament's understanding and control of departmental expenditures.

According to existing Standing Order 84(1), the government must table on or before the 1st of March the main estimates for the year. In reality, to be able to do this by the 1st of March, we need to prepare a document that reflects Treasury Board decisions up until the end of January. We know that in a typical year the government will table its budget somewhere between mid-February and mid-March, so evidently locking down the main estimates by the end of January precludes any ability to reflect budget items in the main estimates.

As the president has mentioned, this presents the scenario where we are presenting to Parliament the certainty of program expenditures that do not reflect the new plans of government, the new priorities of government, as they are articulated in the budget that's tabled in February and March. This in itself presents a fundamental challenge and incoherence in terms of understanding the budget and estimates process.

To remedy this, the government is proposing that the main estimates be tabled on or before the 1st of May, instead of on or before the 1st of March. At this point the budget would have been presented, and we would have an opportunity to include budget items in the estimates for Parliament's scrutiny.

This change would include a number of benefits, not the least of which is a more coherent sequencing of the documents, a timelier implementation of budget initiatives, the ability to reconcile the estimates back to the budget that was tabled in February or March, and the possibility of eliminating a supplementary exercise. Currently we have the main estimates and three supplementary estimates. We would be simplifying the process and presenting fewer documents to Parliament and therefore less confusion.

I would emphasize that in terms of beginning the fiscal year and the approval of interim supply, nothing would change. As was clear in the document, we would present an interim estimates and an interim supply bill that would be based on a continuation of the current-year existing authorities that would allow departments to begin the year, and then introduce full supply in June, according to the current supply calendar.

Before pausing for questions on the issue of timing, I would present this in a visual form where we see in the period now, October-November, the government preparing its fiscal and economic update. That becomes the basis for planning the budget. We understand that the government would be intending to present a budget to Parliament in the February-March time frame. We would introduce interim supply for the 1st of March, allowing departments to begin the fiscal year in April with authorities, and then we would follow up with main estimates that reflect budget priorities and a reconciliation to the budget in May for Parliament's consideration of full supply in June.

Mr. Chair, at this time I think it might be appropriate to pause and allow committee members to digest this issue of timing and perhaps ask questions on this very critical step.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Pagan.

Thank you, Minister, for your presentation. Before we turn it over to questions and answers, perhaps you'll permit me to make an observation or two.

I haven't been in Parliament as long as you, Minister. Outside of you, however, I believe I'm the longest-serving parliamentarian at this table. I agree with your assessment that the budgetary process, in terms of parliamentary oversight, has been, in my view at least, and I've been saying this for well over 12 years, almost a bit of a joke. We simply didn't have the ability to delve into the numbers effectively and to give the scrutiny that we have been charged with doing. I applaud you in your efforts to try to simplify this and try to streamline the process so that all parliamentarians at least have an opportunity to observe and make comment on a literally multibillion-dollar functioning of Parliament. I applaud you on that.

My question for you is this. In the last Parliament, I was charged with the review of the Standing Orders. As you know, each year a new Parliament sits, there is a finite period of time for Standing Orders to be reviewed. As a matter of fact, there was a debate in Parliament just a week or so ago when we were on the road.

The approach I took with the all-party committee studying changes to the Standing Orders—we made a few minor ones—was that I suggested we needed unanimity to make sure, since Standing Orders are really the backbone of what we do and how we operate in this institution.

Have you, Minister, considered Standing Order changes requiring unanimous consent, or exactly how did you plan to approach that?

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

Thank you, Mr. Chair.

First of all, the change to the Standing Orders that is required for this would be moving the deadline for the main estimates from March 1 to May 1. This committee has the ability, as a committee, to recommend to Parliament a change. We will work on this with members of Parliament from all parties.

On the timing of it, really, in order to have this change apply to the next main estimates and budget, it would require something basically sometime in November. I would hate to see us lose a year in terms of this significant improvement. I view any change like this as part of an evergreening approach. We as Parliament should always look at ways we can strengthen parliamentary governance and good governance broadly on an ongoing basis.

In other words, from a change that we make now in terms of the Standing Orders, the next budget and estimates process will see a more logical sequencing of the budget and estimates, with the main estimates actually reflecting what's in the budget. Then, as time goes on....

I look at the Australia model, for instance, where the budget and main estimates appear almost at the same time, or even in Ontario, where it's about 12 days after. As the departments become accustomed to this new timing and sequencing, there will be a tightening of budget and estimates timing over time that will operationalize as a result of greater efficiency. I view this as the start. Over time you'll see a tightening of budget and estimates timing so that they're more coincident.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

I apologize to the committee for taking up some of your valuable time.

We'll start with a seven-minute round of questioning.

Madam Ratansi.

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

Thank you, Chair. And it's your privilege to ask a question.

Minister, thank you, and thank you for taking the initiative. I've been in Parliament—from 2004 to 2011—and I understand, even as a financial person and as an accountant, it was really difficult to bring coherence and transparency.

In terms of the alignment between the estimates and the budget, what sort of co-operation will you need? The estimates are prepared by Treasury Board and the budget by Finance. What sort of collaboration currently exists, and what would you like to see going forward?

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

There is a great level of collaboration between Treasury Board and Finance. I think in recent years there's been an increased collaboration. In fact last year, in terms of items in the budget, 70% were in the supplementary (A)s, as an example.

In terms cash and accrual accounting, we are already doing more reconciliation in terms of tables to reconcile the cash and accrual accounting such that parliamentarians can easily reconcile the two. There are advantages to both systems. The Australians found that in moving to accrual there were some challenges.

I think you actually engaged with some of the Australians at this committee.

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

Yes, we did.

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

What we want to do is more reconciliation over time. We are open to this committee's recommendation on movement towards accrual. Again, there are advantages to both, and having reconciliation—

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

But you haven't faced challenges in collaboration. You have been working as a department very well. Alignment of the budget to the main estimates really makes for coherence. It is a strategy that is really important.

In your four pillars that you've presented, which is the first one you would like to approve? Is it a step-by-step process or is it a one-shot deal?

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

They're all really important. I'm enthusiastic about all of them. The one that requires a change to the Standing Orders is that of the first one, the budget and estimates timing. Again, over time, we have the May 1 date, which provides flexibility in the first couple of budget cycles. As departments, when you're changing these kinds of things, these are big departments. Government itself is a large, complex group of organizations. These are significant changes, so initially it will take some time. It will take a couple of budget cycles to get towards the full potential of this.

Again, in terms of the objective, I want to see a close alignment and a tightening of budget and main estimates timing.

[Yaprak Baltacioglu, Secretary of the Treasury Board Secretariat, Treasury Board Secretariat]

I'll add a bit to what the minister said.

Out of the four pillars, the results policy, making sure that departmental results and plans are meaningful to parliamentarians and also for government itself, has been approved by Treasury Board. We're rolling it out. The first better results documents will come this fall, and hopefully all of the departments by next fall.

On accrual and cash, more work needs to be done by us. Every year we're getting better at making sure that's reflected. Of the four pillars, the first one is the one that requires Parliament's approval. With the other ones, I think, with the committee's concurrence, we can just proceed and make the progress.

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

My second question is on what the chair asked, on needing unanimous consent for the Standing Orders. Do you see any challenges? You're out there educating the parliamentarians. Do you find there will be any challenges or gaps in understanding that they may have?

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

Thanks, Yasmin. The chair, Tom, has been involved in government in terms of procedural issues, and there are different ways you can accomplish this.

It's my strong view that everything we're doing is strengthening Parliament's ability to hold governments to account, not just our government but future governments. Are there changes in the future that we can do as we operationalize these changes? I believe there are, and we can consider those in the future.

I think it would be a mistake to let perfection be the enemy of the good—

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

No problem.

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

—when we actually have the capacity to get some good things done.

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

So my next question is quite interesting. In the U.K., the treasury function and the financial function are in one minister. It's not that I want you out of your job or anything.

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

I thought you were talking about Minister Morneau.

[Voices]

Oh, oh!

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

No, no. But what would be the challenges in a place like Canada? Would that function work? Would it make anything better? We've been hearing so many things. Perhaps you can give a quick answer on that.

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

Look, in Canada the Treasury Board role is not just in terms of government spending but also a challenge function on operational effectiveness across department and agency. It's not just in terms of financial results, but are the results consistent with those intended by the government, particularly in a new results and delivery framework that is a priority of the government?

The other thing is the regulatory: we have a role in terms of scrutinizing and approving regulatory changes, which are becoming more prominent now with the regulatory co-operation council with the Americans.

Our system itself in Treasury Board is the only permanent committee of cabinet going back to Confederation. It works really well, and there is a good relationship with Finance. Finance has been a good partner working with us even through these changes. There's a good collaborative relationship.

[The Chair, Conservative, Tom Lukiwski]

Mr. McCauley, you have seven minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you, Chair.

Thank you for joining us. It's always a pleasure. I think we can all agree that aligning the estimates and the budget process is a very good thing.

I have a quick question for you. The 2012 OGGO report suggested March 31. You're suggesting May 1.