Procedure and House Affairs Committee on March 16th, 2011

[Pierre Paquette, Bloc, Joliette, QC]

I imagine there are significant differences between a costing process involving a program or legislation that has already been in effect for some time, as opposed to a process involving a new program. I'm talking about the process. I certainly understand that, in terms of information, you would have more available once implementation is underway. Ms. Dériger told us that this is done in relation to the affected department.

[Alister Smith]

With regard to process, I think there is a difference, in that new initiatives typically need policy approval at cabinet first. You need to go the memorandum to cabinet route. You need to explain why you need a new program, a new policy, a new initiative.

Existing programs tend to be more in the Treasury Board ambit. They tend to be changes to existing parameters of a well-known program, so you don't need the policy cover, new policy approvals. However, you do need funding approvals, and the funding approvals require Treasury Board scrutiny. It tends to be treated differently internally in that way.

[Pierre Paquette, Bloc, Joliette, QC]

In closing, I would like to specifically address Bill C-48, which is intended to allow judges to refuse parole before an inmate has served 25 years in prison. A costing was necessarily prepared in relation to this bill. Yet the Minister says that he didn't want to provide that information because it was too uncertain. If I understood what you said, the decision not to disclose the cost of the bill was the Minister's. That costing does exist somewhere.

[Alister Smith]

Let me respond quickly to this. The deputy heads of these organizations are responsible for the cost estimates. The chief financial officers sign off on the cost estimates, and they are accountable for the cost estimates. If they can't come up with a cost—if they don't feel there is a true cost—then they will inform their ministers accordingly, that there is no cost that they can calibrate there.

[The Chair, Conservative, Joe Preston]

Thank you.

Monsieur Godin.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Thank you, Mr. Chairman. I asked some questions earlier. I'd like to know whether there are bills that you will say involve no cost. I can cite the following example: No cost estimate is available because amendments would have an impact on correctional costs at the provincial and territorial levels. The bill should not have any financial implications for the Correctional Service of Canada since there are very few young offenders in its institutions.

If we amend laws, we have to include costs for the Federal Court. The fact that young offenders are not in federal institutions does not make it a provincial court.

[Alister Smith]

It's very hard for us to second-guess the department on costs for some of these bills. They are accountable for preparing the cost estimates based on the guide that we require them to use. Also, their chief financial officers sign off on the costs. If they cannot identify a cost in some cases, they will not be signing a document saying that this is going to cost x millions of dollars and we're going to need funding for it.

We have to take their word for those cost estimates, since they are accountable. They've done their calculations. They have done their analysis. We will see later on if there is a problem because they have underestimated the costs. Then they will certainly have to come to us, and we will have a look at that point. But it is not in their interests to underestimate the costs. If they underestimate the costs, there won't be any funding for it.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Allow me to continue. With respect to Bill C-16, it says here that detailed information on costs is not available because CSC is expecting the financial repercussions to be minimal. A bill is drafted, we vote on it, and the expectation is that costs will be minimal; then afterwards, we get a big surprise.

[Alister Smith]

As I was mentioning, they are accountable. They are signing off on these costs. If they say there is no cost involved, it is very difficult for them to come to Treasury Board, for example, and ask for funding. Because they said there was no cost involved, they would have to absorb the cost. It is not in their interests to underestimate these costs, so they should identify any costs that they can up front.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

It seems to be pretty well the same thing for all the bills. They seem to be moving forward with their eyes shut when it comes to their law-and-order bills, assuming that it won't cost anything.

Mr. Paquette referred to Bill C-48. There again, no detailed costing has been provided, because the decision is discretionary and does not apply to multiple murderers. The impact will only appear in subsequent years.

But bills are being passed. However, you say the opposite—that there is a responsibility to provide accurate information and tell people how much this will cost.

[Alister Smith]

I'm saying that it's the responsibility of the department--the deputy head and the chief financial officer--to identify the costs. They essentially are signing off on this. That is an important accountability, and we don't second-guess them on that. That's not to say that costs can't evolve. As I was saying, it's very difficult, for some of these bills, to identify long-term costs. But they have every interest in being accurate, because if funding depends on it down the road and they have underestimated those costs, it's very difficult to get the funding for those initiatives.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Ms. Dériger, you wrote a paper on this, to explain how a costing is prepared. In this case, is it normal for a whole series of bills to be drafted without our actually receiving this information?

[Donna Dériger]

The “Guide to Costing” is principles-based. It recognizes that reasonable assumptions need to be made. Cost estimates are often based on a variety of reasonable assumptions and other data that is known. The “Guide to Costing” explains how to cost; it does not instruct what to cost.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

A study should be done, if a bill is going to mean that people will be kept in prison longer than usual. We know how many people are in prison now or what percentage of people in prison. That is one way of determining the costs.

[Alister Smith]

Again, the departments you talked to earlier today have done a fair amount of work in these areas. They know these areas very well. They know these areas better than we do, and they've come up with an assessment of what will cost them, among the many bills you've been looking at, and what will not cost them.

If they say they don't think this is going to cost them anything, they are signing off on that and are not asking for funding for it, so they have a fair amount of confidence.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

It's still within the same government. I mean, if they pass the bill, and they want that bill, what power do you have to say, “You didn't give us the amount, it's too much, and we're saying no”? Who are you to say no? I mean, even the Treasury Board is still the government. It's the government's bill.

[Alister Smith]

The Treasury Board very frequently says no to all kinds of initiatives, and it also reduces the cost of initiatives. It provides a fair amount of scrutiny of the cost of initiatives when they get to the point where they are very well articulated and are ready for funding.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Does it get to a point where it goes against a bill that passes in the House of Commons? If you pass a bill in the House of Commons, then it is the law. If it comes to cost more, how does the Treasury Board say they're not going to build jails? When the judges say they are putting him in jail, he's not going to go to a hotel somewhere; he's going to go to jail.

[Alister Smith]

You make a good point, because the Treasury Board's job is to do due diligence on these sorts of issues and these costs. Indeed, there may well be disagreement with the department over how many prisoners there will be or how many jail cells, or what have you. We will apply a certain amount of challenge to the department to ensure that the right costs are provided.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

If the judge has no other choice, by law, than to put people behind bars, and it's not up to the judge, then I don't know how the Treasury Board can come and say that it costs too much and you're not building that jail, even if the judge says he is going behind bars.

[Alister Smith]

We will be questioning many aspects of the analysis that is undertaken.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

There is a difference between questioning and agreeing.

[The Chair, Conservative, Joe Preston]

Monsieur Godin, your time is up. There will be another round.

Mr. McGuinty, you're up for five minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Chair.

Thank you very much to both of you for being here this afternoon.

Mr. Smith, in your opening remarks you said you would be happy to answer questions on the guidance provided to departments on the costing initiatives. I want to get your insight for Canadians on the guidance or support that Treasury Board provides to the Parliamentary Budget Officer.

I just want to remind everybody what the mandate of the PBO is. He'll be joining us here shortly to give us his insight. It's to provide independent analysis to Parliament on the state of the nation's finances, the government's estimates and trends in the Canadian economy, and, upon request from a committee or parliamentarian, to estimate the financial cost of any proposal for matters over which Parliament has jurisdiction.

We would agree that's the mandate.

Mr. Smith, the Parliamentary Budget Officer, who was appointed three years ago next week, has repeatedly publicly decried that Treasury Board, the Department of Finance, PCO, and line departments are regularly shutting him down in his overtures for information so he can do his job. It's not a surprise to anybody here. We've all heard it repeatedly. After being appointed by Parliament in a post created by Parliament to enhance trust in our country's finances, it has gone from him reminding people that he should have access to this information to, on several occasions, senior members of the government disparaging his credibility.

Can you help us understand? You're the associate secretary of the Treasury Board of Canada. You have access to all the numbers. The Canadian people are confused because they hear the Parliamentary Budget Officer say, for example, that 65 stealth fighter jets are going to cost some $29.2 billion over a fixed period of time. First the government says they're going to cost $9 billion, then they're going to cost $13 billion, then they're going to cost $15 billion, and then they're going to cost $16 billion.

Most deficit projection numbers put out by the Minister of Finance have proven to be wrong, when in most instances they have been proven to be right in terms of the PBO's work.

Why is this happening? Why is the PBO not getting access to all the information he needs so we can do our jobs and Canadians can have more trust in the state of the country's finances?

[Alister Smith]

You've asked a number of questions there. Treasury Board has provided information to the PBO based on the requests we've received from him. They are consistent with the provisions of the Parliament of Canada Act. Where he has asked for information that is deemed to be cabinet confidence to which he does not have access under the Parliament of Canada Act, we have not been able to provide it to him. We have tried to be as forthcoming as possible in providing information we can provide to him.