Public Accounts Committee on Feb. 26th, 2007

[Tom Wileman, Principal, Office of the Auditor General of Canada]

Thank you, Mr. Chairman.

Basically, we looked at supplementary estimates over a five-year period, from 2001-02 through 2005-06. Now, 2005-06 was not in fact put into effect. It wasn't voted on, because the election was called just after those estimates were tabled in the House.

What we did, indeed, find is that in the three departments we examined, there were a number of examples that were described, as the member has just referred to, that were reappearing at various times in the supplementary estimates. These were examples of various kinds, and they fell into different categories. In some cases there did not appear to be a permanent source of funding. In other cases, some projects were submitted under different names in different years as variations. In some cases it was explained in terms of changes to programs. In other words, names of programs do change over time. So we had a variety of observations in relation to the supplementary estimates over those years.

[David Moloney]

Mr. Chair, if I could comment briefly, one of the things we are very strict about under the current expenditure management system is that if cabinet approves an ongoing mandate, there shall be an ongoing source of funds. If cabinet approves spending for three years or five years, then there needs to be a three-year or five-year source of funds.

Given that spending started to grow once the budget was balanced around 1997-98, over the last number of years we have seen a number of programs with three or five year funding come up to what we refer to as “sunsetting”. There have been times when programs sunset. There have been times when programs were merged together, changed somewhat, and in need of a new spending approval. There have been times when governments have not been prepared, in the timeline required to get something into main estimates, to take the decision to commit more money, and sometimes have extended a program only for a year rather than taking a multi-year decision. If those decisions happen after about November, or December at the very latest, typically we're not able to get that into the main estimates.

It is a very case-specific thing. But the one thing we can say for sure is that if there's an ongoing cabinet mandate, there is ongoing cabinet funding.

[David Christopherson, NDP, Hamilton Centre, ON]

Mr. Wileman, what do you think about that?

[Tom Wileman]

Well, we do make some comments about the Treasury Board Secretariat. Mr. Chairman, we do make some comments about the process, of course, and we say that one of our concerns is that we felt that in some of these cases, when we discussed them with Treasury Board Secretariat, there could have been opportunities for more review. In other words, there could have been opportunities for examining these particular recurring cases and perhaps securing changes in terms of the extent to which they were coming forth a number of times in supplementary estimates. That was one of our concerns.

[David Christopherson, NDP, Hamilton Centre, ON]

Thanks, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Christopherson.

Thank you, Mr. Wileman.

Go ahead, Mr. Wrzesnewskyj, for five minutes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

To continue with supplementary estimates, do we flag departments or programs that continually have to go for supplementary estimates? If it happens two years in a row or three years out of five, does that situation cause it to be flagged in any way?

[David Moloney]

An attempt is made by the central agencies generally; it is more a Privy Council Office function than a TBS function, or even a Finance function. The Privy Council Office does make some efforts to ensure that it has a good sense of the programs that have impending and expiring funding mandates, so that cabinet can take the appropriate decisions, if possible, in the kind of timeline that would allow us to turn around that funding. If some of these programs, year after year—

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Mr. Moloney, basically you've said no in a lot of words, so there is no way that you actually flag this sort of situation. Is that correct?

[David Moloney]

I think I'm saying that it's not actually a departmental issue, but a program issue. It's not a department issue per se.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Auditor, do you think that's an adequate response? Should there not be a way of flagging a department or program that has to go for supplementary estimates year after year?

[Sheila Fraser]

Yes. I think that's what Mr. Wileman was responding to earlier—that when there is a recurring use of supplementary estimates for a program, we would expect a review and an attempt to eliminate that. We would expect to see it built back into the mains.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

That's what we would expect.

[Wayne Wouters]

This is, again, not necessarily the department. It could be that the government has decided, as opposed to making a decision to cancel the program or to extend the program on an ongoing basis, to extend it for one year. The decision has been made in that case to extend it by one year, and for that reason it could come before supplementary estimates for a couple of years in a row.

It's not necessarily how departments are deciding whether they should or not; that could be an overall government cabinet decision.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

I would assume, though, that there should be mechanisms in place to red-flag for Parliament that there is a recurring problem. Basically you're sloughing things off onto the government.

[Wayne Wouters]

Well, I'm not sloughing off to anyone. There are many spending decisions made by government every year. If a program is sunsetting, normally the government will review that program. There has to be a decision that we are going to terminate, or we extend. It's often the case that those programs are terminated. In many cases, they're extended indefinitely. From time to time, they may be extended for a year only. That is a decision that governments do make from time to time.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Do we have any sort of ranking? For instance, I notice in the chapter that three departments were looked at and for a couple of years Agriculture especially seemed to be going for supplementary estimates for a large portion of its funding. I assume that was perhaps due to some act of God—drought or something of that sort.

With respect to other departments, do we have a ranking of how often departments go for supplementary estimates and what percentage of their overall budget that is? Is there anything in place to give us a handle on what's happening with the supplementary estimates, beyond knowing that it's now risen to over 10% of yearly spending?

[Sheila Fraser]

To my knowledge, that does not exist.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

So there's nothing. Amazing.

Probably the answer is going to be no, but do we at least have...? Well, we know there seems to be no data we can really get at that would highlight when we're into this situation of supplementary estimates hopefully not being spent before getting parliamentary approval. How often do we have departments that actually come in under budget, or does that never take place?

[Wayne Wouters]

They generally all come in under budget. This is why we are lapsing over $5 billion in spending every year. The consequences of being over budget are not very pleasant, so generally you are at a balance or you're under. I think if you look overall, the lapsed funding is over $5 billion. Most, if not all departments, are coming in under budget every year.

Just to go back to the supplementary estimates, each year governments make a decision on their spending priorities. They reflect those spending priorities in a budget. Our supplementary estimates and our mains are not aligned. Therefore, once the budget is determined as to what the spending priorities are of the government, then those spending priorities are reflected in the supplementary estimates.

It's not necessarily a question of departments making requests on an ongoing basis to supplementary estimates; it's the fact that the government is deciding its spending priorities through a budget, which is reflected in supplementaries.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Wouters.

Thank you, Mr. Wrzesnewskyj.

Do you have a comment on that, Mrs. Fraser?

[Sheila Fraser]

No.

[The Chair, Liberal, Shawn Murphy]

Okay.

Finally, Mr. Williams, I understand you have a question or two.

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

Yes, thank you, Mr. Chairman.

It was brought to our attention by the Auditor General a little while ago about the unrecorded liability that was reported in the Public Accounts of Canada dealing with the gun registry and whether they had actually exceeded the estimates approved by Parliament. They got themselves a simple little legal opinion that said yes, I'm afraid you did exceed the estimates approved by Parliament and you had better go back and ask them for some more money. Then they got a long, convoluted legal opinion to say that perhaps they didn't need to ask Parliament for supplementary estimates.

Of course it ended up being recorded in the public accounts as an unrecorded liability. Now, that's an oxymoron if there ever was such a thing.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Recorded. It's “recorded” liability.