Public Accounts Committee on Feb. 26th, 2007

[Wayne Wouters]

Yes.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Why is the government going ahead and spending all this money before it gets parliamentary approval?

[Wayne Wouters]

If you look at the process, that's in fact what the government does. We submit the mains, as you know, every year to seek parliamentary approval. For those items that cannot be put into the mains—and that happens for a whole number of reasons—supplementary estimates are tabled, either in the fall or in the supplementary (B)s in the spring, in order to seek approval from Parliament to spend each year. That's the approach that has been put in place to actually seek parliamentary approval.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Do you advise the government when they come to you and say that, as the Treasury Board Secretariat, you're in charge of getting these supplementary estimates through Parliament? Do you advise them that, shucks, guys, you shouldn't be spending the money until you have parliamentary approval? Or do you just go ahead and say to send the paperwork in and hope it comes back with a stamp on it?

[Wayne Wouters]

No, if you have looked over the last number of years, any department that decides to spend in advance of receiving the appropriate authority through Parliament does so very much at their own risk, because Parliament can decide at any point in time not to approve that particular spending. That happened, in fact, in the last minority government. I would argue that departments need to be very prudent until they do receive parliamentary approval. That is where, at the end of the day, spending is approved.

[John Williams, Conservative, Edmonton—St. Albert, AB]

I'm not sure what the risk is, Mr. Chairman, other than coming before the public accounts committee to see what they have to say about spending money that's not authorized by Parliament.

One of the things we do nowadays is carry over at the end of the year to try to reduce March madness. I've always wanted the carry-overs to be reported to Parliament as a single supplementary estimate so Parliament can see what we approved last year and what wasn't spent and is being carried forth with the intention of being spent in the current year. I've never been able to convince the government that Parliament needs this information to see what kinds of carry-overs are being done.

Do you think it would be good business sense to let Parliament know what carry-overs are being carried forward?

I'll ask Mr. Moloney.

[David Moloney, Senior Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat]

In fact, we highlight the aggregate amount of operating budget carry-forward in the supplementary estimates documents. The one just tabled by the president last Thursday, for example, pulled together all the operating budget carry-forward items to show Parliament exactly what they added up to. We agree with that.

[John Williams, Conservative, Edmonton—St. Albert, AB]

I was actually asking for a separate supplementary estimate, Mr. Chairman, but if they're highlighted in another one, I guess it's halfway there. We'll just keep working on it.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Williams.

Mr. Christopherson, eight minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

Welcome all. Thank you for your presentation.

I believe Ms. Sgro asked a question that's fairly motherhood for us, and that is, do you agree with the Auditor General's recommendations? And we like to hear no more than maybe one or two beats of a pause before you jump right in and say yes, of course. That didn't happen. I'll give you a chance to put a finer point on it, because you said you agree with almost all the recommendations.

In looking at the Auditor General's report, I have to say I was struck by the lack of commitment in a lot of the responses. Here's the way it seems to go. For instance, page 41, for anyone interested, the central agencies' response was:

Designing and implementing a process of systematic review.... The government has committed to the following: • programs should focus on results and value-for-money, • programs must be consistent with federal responsibilities, and • programs that no longer serve the purpose for which they were created should be eliminated.

And then on page 47, “the central agencies agree that clarity of roles and responsibilities is essential.” I'd rather have heard that you were committed to clarifying the roles and responsibilities.

And the same on page 34 in the government response: “The government's overall response, included at the end of the chapter, indicates that the findings are generally consistent with its view of the present Expenditure Management System.”

I'm noticing gaps and I want to make sure we're not in any kind of word games here. Are there recommendations in here that you do not agree with and have no intention of acting on?

[Wayne Wouters]

At this point, no. We are in agreement with the Auditor General in terms of her recommendations in her report. I can't be more categorical than that. We think it's an excellent report and we're quite comfortable with the recommendations she's put on the table.

[David Christopherson, NDP, Hamilton Centre, ON]

Good. So you're saying unequivocally you agree with the recommendations and you're planning to recommend those recommendations?

[Wayne Wouters]

We are putting in a plan. We are recommending a plan to the president, who will bring this forward to cabinet, basically following through on the AG's report and how we can address the overall concerns she's raised and how we can respond to the recommendations.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay. And maybe it's just a matter of speaking, but you used the word “basically”, okay? Is that just a word as a filler you threw in or, are you saying, “for the most part”, as in that's what “basically” means?

[Wayne Wouters]

I think the honourable member will be the best judge of the overall response to the AG's report when the government comes out with its plan.

[David Christopherson, NDP, Hamilton Centre, ON]

Agreed, but first of all I want to set the standard. I want to make sure the standard is that we can expect to see all these recommendations being implemented in your new system and in that report. And if they aren't, then it would be contrary to testimony you're giving today.

[Wayne Wouters]

Again, as you know, some of the recommendations the Auditor General has proposed are at a fairly general level. Sometimes the devil is in the details. You're going to have to be the judge of how we've responded to the somewhat higher-level set of recommendations and what we actually have to implement.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay, and we will.

I'll go to an area that Mr. Williams touched on, although I want to go in a little different direction. The Auditor General, in her opening comments, said in paragraph 13, the last sentence, regarding supplementary estimates—Mr. Williams dealt with the issue of spending money that hasn't legally, technically, been approved by Parliament. I also want to talk about the amount of supplementary estimates, which the Auditor General is noting has more than doubled in recent years. Of course, Parliament is forever trying to get everything in the mains because with the supplementaries, there are games that can be played, things are going on.

So why this trend line, and what are you going to do about it?

[Wayne Wouters]

I think, first and foremost, the trend line is a reflection of the increase in spending by the government each year. There has been a significant increase in spending year over year that was announced as part of each budget each year, and as a result of these being in the budget, it's been very difficult for us to put the budget provisions into the mains, because we need to finalize mains often much before the period of time when the budget comes down.

Over 130 agencies make up the mains, of which there are virtually hundreds of votes. Just the pure logistics of bringing all that together to put into the mains each year is a huge exercise. It takes months, and we therefore have to close the books on the mains much earlier than the budget. We would like to be able to include the budget items in the mains, but our current system and approach simply does not allow us to do that. Therefore, we need to come forward with supplementary estimates following—

[David Christopherson, NDP, Hamilton Centre, ON]

I understand the procedure and I understand the difficulty. I understand all of that. That would be built into the 4.5% that existed in the previous eight years. What I want to know is why it's doubled. You can tell me the numbers are bigger, but for that period of time, given the low inflation we've had, I'm having a great deal of difficulty.

You're outlining to me how difficult the process is. I accept that. I see that in the 4.5%, if one accepts that as an acceptable number, during that time period. What I find unacceptable is that it's now double that, so I want to hear why. Don't tell me how tough it is originally; we've already covered that. What's the doubling of the amount over the last few years? Why is that happening? It suggests to us something systemic.

[Wayne Wouters]

Yes, it's moving from deficit to surplus.

David, do you want to comment on that?

[David Moloney]

Sure. I have two examples.

In the 1997 budget, as we were just coming up to a balanced budget, there was a total for 1997-98, the next fiscal year,of $600 million in new direct program spending proposals. The supplementaries in total that year were $3.7 billion of voted spending. Last year, in contrast, we had $2.6 billion—an extra $2 billion—of proposed new direct program spending for the coming fiscal year, which is this fiscal year. Supplementary estimates proposed for this year in total are $5.4 billion.

As a second example, we spoke about operating budget carry-forward, which is always the largest element of supplementary estimates. We can't know how much to allow departments to carry forward until September, when the public accounts close. That's $1 billion this year in the combined supplementaries. It was $954 million last year. It was $1 billion the year before that.

Basically, operating budgets have doubled over 10 years. That in itself also contributes to an increase in the underlying amount of supplementaries, so it's both larger government and more policy spending.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Christopherson, and thank you, Mr. Moloney and Mr. Wouters.

Mr. Wrzesnewskyj is next, for eight minutes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Mr. Chair.

Mr. Wouters, you mentioned that the EMIS program is replacing six legacy systems. What is their annual cost?

[Wayne Wouters]

David, would you comment?