Government Operations Committee on Nov. 23rd, 2023

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

Another area of interest to all of us here, as well as to Canadians, is inflation.

We recently heard that inflation is down from 3.8% to 3.1%. I remember, when you were here last year, we asked you where you perceive we're going to be in 2024. You said we're going to be somewhere at the upper end of 1% to 3%. We're at 3.1%, and we still have a couple of months to go. I'm going to ask you the same question.

Where do you think we're going to be in 2024, based on the new estimates and what you heard in the fall economic statement?

[Yves Giroux]

Our economic and fiscal outlook—I have it here—suggests we will be within the 2% to 3% range. I'm trying to find it.

We estimate that, for 2024, the average will be about 2.8%. We should be closer to 2% by the end of 2024, if there are no unforeseen events that change this forecast.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay.

My colleague touched on the lapse rate. Can you comment on the lapse rate and the concern you have about it?

[Yves Giroux]

It's not necessarily a concern.

The lapse rate is the portion of authorities that Parliament provides to the departments. They have the capacity to spend up to these amounts. The lapse rate is the portion that ends up not being spent. It can be a concern if it means departments are unable to spend in areas of priorities. It could be a concern if there are dire needs that are not met because departments cannot implement some initiatives quickly enough. However, it can also be a good thing if it avoids wasteful spending—spending for the sake of using all the appropriation.

It has to be looked at with a specific lens. You cannot just say that a lapse is a bad thing in absolute terms or a good thing. One has to look at the reasons behind a certain amount of lapse.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

I would like to submit that it's more about making sure that we are using the funds appropriately.

With about a minute to go, in your report on page 5, you talked about how by this time last year, we had spent about 60% of the projected total budget of 2022-23, as opposed to this year, for which we've spent only 40% of that budget.

Can you expand on that one?

[Yves Giroux]

What we mean, and what I think is in the report, is that last year we were at 90% of the budget initiatives for which there were authorities provided. This year, it's closer to 60%, although after the publication of this report, we received subsequent information from the Treasury Board Secretariat that suggests the number is higher, but still lower than 90%.

This indicates that the pace of implementation of budget measures is not as rapid as it was last year and in previous years.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Now we'll go to Ms. Vignola, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Mr. Giroux, Ms. Vanderwees and Ms. Giswold, thank you for being here with us today.

Mr. Giroux, I noticed all kinds of things in the budget, but I'd like to start with one in particular.

I see that money is earmarked to catch up on annuities paid to first nations. The compensation for Treaty 8, which was signed between 1879 and 1921, has remained unchanged since the time of signature. For the Restoule settlement of the Robinson-Huron Treaty, there has been no increase since 1875.

Does this mean that no government since then has increased these budgets for first nations, and that they have all remained unchanged, which might also explain the state in which first nations find themselves, that is, lacking both drinking water and services?

What does the fact that there's been no increase mean? What are the consequences of that now, other than the fact that the government now has to quickly play catch‑up?

[Yves Giroux]

I'm not in a position to comment on consequences or specific agreements.

During my career, I've worked on certain aspects of indigenous relations, and what I've learned is that these tend to be very complex relationships, especially when there's litigation and claims involved.

As such, the fact that compensation hasn't been increased in decades—centuries, even—reflects the fact that claims tend to be negotiated over a long period of time.

That doesn't mean services aren't being provided. Those are often two separate things. That said, I can't comment specifically on those two agreements because we don't have the details. All we have is the numbers in the supplementary estimates.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

When I look at the supplementary estimates, I'm astounded at how many times I find myself wondering why a particular expense wasn't planned for. I make a note in the margin every time.

In your opinion, of the $20 million the government is asking for in the supplementary estimates (B), how much could or should have been in the main estimates last spring?

[Yves Giroux]

That's a tricky question, too.

For example, if you look at agreements to settle specific claims or indigenous issues, itcan be tricky to put them in the main estimates because the final numbers aren't known at the time. It's hard to know how much that amount will be when the main estimates are being prepared. In contrast, for departmental operating budgets for things that aren't totally new, such as budget initiatives, it's harder to see why these measures and funds weren't included in the main estimates, which should be the default to make your work as parliamentarians easier.

That's why I can't tell you exactly how much should have been in there. That would involve a lot of judgment calls and a lot of information I don't have, including each department's and each organization's detailed operational information.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I also noticed that the supplementary estimates (B) include subsidies, and I have the same question.

Do you think subsidies are unforeseeable expenditures?

[Yves Giroux]

No, in this case, it's foreseeable.

Typically, they should be in the main estimates unless there were increases announced in the budget. The way the budget cycle works, the budget is released after the main estimates.

This could explain some degree of disconnect, but the idea is that normal operating expenses should all be in the main estimates.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

Today, your office released a calculation of what it would cost if the government were to extend the repayment deadline for CEBA loans from January 18, 2024, to December 31, 2024. Apparently, that extension would cost a little over $900 million.

When we asked the Minister of Finance to extend the deadline to December 31, she said it would cost $2 billion, but it turns out it's a little over $900 million. That's a lot of money, but it's relatively good news.

Have you calculated the total economic cost and the costs related to all of the government supports, such as EI, that would be needed if tens of thousands of SMEs went bankrupt?

[Yves Giroux]

That's a good question, but it's not something we considered because it would involve all kinds of hypotheses about the number of bankruptcies that would occur if the deadline is not extended. It would depend on a lot of hypotheticals.

Survey results indicate that some businesses will find it a lot more difficult to continue their activities if the repayment deadline isn't extended. However, it's hard to tell if all or even many of those businesses would actually close their doors.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Johns, please go ahead.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you for being here.

I want to go back to the outsourcing conversation.

Right now, it's predicted that the government is going to spend $21.6 billion in highly paid consultants and outsourcing services for Canadians.

My understanding is that they intend to cut 15% of what they've allocated for outsourcing, but that still doesn't even bring us back to 2021-22 levels. Would that be accurate?

[Yves Giroux]

If they do reduce these outsourcing contracts by 15%, it would certainly contribute to bringing this funding back to the authorities or the actual spending in 2021-22. What we have seen so far is a reduction of $500 million split between travel expenditures and consulting fees, and that is not sufficient to bring down the level to the actual expenditures in 2021-22.

[Gord Johns, NDP, Courtenay—Alberni, BC]

What I find really alarming is that you just did a report looking at the CEBA loan and the cost of the CEBA loan. Right now, we have 250,000 small businesses that have taken out a CEBA loan, businesses that closed their doors to protect the public health of Canadians. They took a huge hit. Clearly, the refundable portion would not be able to absorb the hit they took, especially when it comes to the hospitality industry, where very few businesses have been able to make any sort of payment, even a small portion of that.

CFIB stats tell us that one-third of those people literally don't have the money and can't secure a loan. Would you not agree that, if the government cut more on outsourcing, they could afford the money that you've projected—$904 million—which is quite large in your prediction, given the fact that it doesn't account for businesses paying down their loans over that period. Could you speak a bit more about your report?

For me, I find it very difficult that these businesses are going to take another hit on the chin, yet we're paying this exorbitant amount of money for highly paid consultants who are making a profit. We are also learning that a lot of them are making commissions while they're subcontracting out in the pyramid scheme that they've designed, which is going on in a lot of these corporations.

[Yves Giroux]

It's certainly a decision that the government could decide to make, to extend the deadline for CEBA repayments and finance that through a reduction in outsourcing and professional services. However, reductions in outsourcing services could potentially have an impact on the delivery of some services, depending on the areas that would be cut. It's a decision that would be best left....

I cannot say whether it's feasible without affecting services. It would depend where the cuts or the reductions would take place. It certainly is an avenue for the government if it were to decide to extend the deadline for CEBA repayments.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I would imagine that if they changed their commission set-up and put a cap on all commissions on outsourcing, they'd be able to cover the extension of the CEBA loan, which is something I am really disappointed the Liberals aren't supporting and the Conservatives have not been active on.

In terms of the indigenous services funding, you cite the increase, but we're hearing from indigenous communities about the cuts to indigenous languages, which are critically endangered. There is an urgent need for immediate action to ensure that these culturally rich languages are not lost forever.

Funding would allow indigenous communities to develop and implement intensive immersion programs that have proven effective for creating new high-level intermediate language speakers in just a few years. I'm hearing this from Tseshaht First Nation in my riding and from Ahousaht nation in my riding. These are languages that were stolen through residential schools.

Do you see anything in your report that...or the government's failing to fulfill its promises when it comes to reconciliation?

[Yves Giroux]

What we have seen in the supplementaries are significant increases in funding to settle claims that have been outstanding, but I don't see any funding that would be related to indigenous languages.

We have done reports in the past that looked at performance indicators for both departments—Indigenous Services and Crown-Indigenous Relations—and we found that slightly more than half of the performance indicators were met over a certain period of time, which suggests that there is still room for improvement in the delivery of services for indigenous Canadians by these two departments.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Slightly over half seems pretty far from what's needed. You can imagine that, as New Democrats, we're pretty happy to see the government finally introduce new anti-scab legislation, legislation that we've fought for. It still needs to pass. If it does, workers would have far more power since companies could not replace them with scabs during labour actions. However, the new legislation would significantly increase the responsibility of Employment and Social Development's regulatory board, the Canada Industrial Relations Board, which will need to make a determination on every strike.

The board is already overburdened, so I would expect this massive new workload to come with new resources, but the opposite seems to be the case. The government wants to reduce ESDC's funding by $3 million. How important is it for the government to make sure that new initiatives like this are accompanied by corresponding increases to funding?