Public Accounts Committee on Feb. 28th, 2007

[Sheila Fraser]

It's important to explain the nature of the expenditures more clearly.

[The Chair, Liberal, Shawn Murphy]

Merci beaucoup, monsieur Laforest.

Mr. Sweet, you have up to eight minutes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Thank you, Mr. Chairman.

Since Mr. Laforest got us on to supplementary estimates, I'll just begin there first, in regard to page 81 in your report.

I'd like to ask Mr. Wouters first, do you share the concern that is indicated by the Auditor General—and from the text I don't know whether it's a serious concern or a mild concern—about the escalation of supplementary estimates?

[Wayne Wouters]

I think it's the desire of all of us to have as much as we can in the main estimates, as opposed to using supplementary estimates as a tool. I think we explained the last time we were here why it's very difficult to do that.

I would point out that governments can decide--and particularly a government that has been able to manage a surplus situation, as have this government and the previous one--what to do with that funding. If they decide that instead of reducing the debt or reducing taxes they are going to spend, then that spending will need to be reflected through supply in Parliament.

What you are seeing in the last number of years by way of higher supplementary estimates is the overall growth in spending year over year, which has largely been announced in the budget and therefore not reflected in the mains but essentially reflected in supplementary (A) in the fall or the December period.

Supplementary (B) is usually quite small, and it often involves transfers between one department and another, and the like. But the large spending, the significant use of supplementary estimates, has been in supplementary estimates (A), which reflects the increase in spending as a result of decisions made in the budget.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

The concern the Auditor General raised was not just about the growth in supplementary estimates, but the recurrence of specific things. We covered some of those in our last meeting.

On page 81 there are three specific departments that lead the way and dominate in their percentage of the supplementary estimates. Could you give us the reason they tend to be the biggest consumers in supplementary estimates?

[Wayne Wouters]

David may be able to comment on Public Works or Canadian Heritage.

In the case of Agriculture and Agri-Food, it often is the case that during the year special programs are developed to deal with drought or a farm income situation. As a result of that, they have used supplementary estimates quite considerably.

David, can you comment—and perhaps the Auditor General can comment—on Public Works and Canadian Heritage?

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

I can't point to anything specific in respect to Public Works, but over the period portrayed here, 2001-02 through 2005-06, Canadian Heritage has a relatively stable share of its overall estimates. During that period quite a number of new spending initiatives in the Canadian Heritage portfolio were announced in a sequence of budgets. I believe you would be seeing the first-year spending amounts there in respect to those various initiatives.

[Wayne Wouters]

David, you can correct me if I'm wrong, but I also believe that in the case of Public Works and Government Services, with each new spending a certain allocation is provided to Public Works and Government Services to cover off accommodation. Every time there's a significant increase in spending, I believe 20% of any new program is automatically allocated to Public Works and Government Services because they have to provide the facilities, so I would think that increase is partially reflected through that particular provision.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

We have had many concerns on this committee, but one of the biggest we've had is CFIS I and CFIS II, the databases that went out of control as far as expense was concerned. We are talking about a $16 million to $53 million investment, supposedly over five years; we're at $40 million now.

Obviously our concern would be value for dollars. When this program gets rolled out in November, do you see a substantial increase in capability not only to monitor the things that Mr. Wrzesnewskyj was speaking about on those departments that overspend, but also to reflect on money that's been in older programs and to make sure those are still relevant and able to give the government good information--certainly much better than what we've had from these seven legacy systems?

[Wayne Wouters]

When it's fully implemented, it is one tool that will allow us to be able to gather this information on a much more timely basis, and we are able to collect this data right across the government. Clearly that's going to be important. It is a tool that'll allow us as well to assess spending against results. Performance results will also be included as part of the information that we can gather through that system.

But it's only one tool. Our view is that an effective expenditure management system needs a number of different tools as a system to collect the data. The data must be organized in a format so that resources are actually aligned to those particular outcomes. Departments have to do that first and foremost, and then you need the system to be able to collect it.

The other tool we've talked about is the need for a strong evaluation function in departments, so that on an ongoing basis someone is assessing whether in fact the resources are actually achieving the outcomes that have been articulated to departments. We see the expenditure management system as a whole number of tools that are required in order to be effective and to answer the questions that I think Canadians expect governments to answer.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

This system is taking the place of seven legacy systems. Is it the silver bullet, so to speak, as far as being a main foundational piece for that management is concerned?

[Wayne Wouters]

That's definitely the case. It's a very important system for us. I think we have now put in place a very effective project management system to ensure that we will achieve our objectives. We do think it's fundamental for a renewed expenditure management system. I couldn't agree with you more.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Sweet.

Next is Mr. Christopherson, for up to eight minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

It's good to see you all again.

I don't have a new line of questioning; I covered everything I was interested in last time. I have one follow-up, though, that I didn't get to ask last time.

It's on the supplementary estimates. We've talked about it a lot here, and that's good. Based on the answers I heard, I would expect there would be similar trend lines in the larger provincial economies in terms of the increase of supplementaries, and also in other Commonwealth countries. Again, their budgets are getting larger, and much the same pressures are on them. Do we see similar trend lines to confirm that we've identified the systemic problem and we're addressing it? Otherwise, if it's not happening in other parliamentary systems, then you have to wonder whether we have a unique problem and we need to dig a little further.

[Wayne Wouters]

Some of the Commonwealth countries, Mr. Chair, have not been in a surplus situation as long as we have. In fact, we're one of the few G8 countries that have been in a surplus position--for us it's now eight years--so that comparison cannot necessarily be done with all the Commonwealth countries.

We have not--at least I haven't, although David may have--looked at other provincial governments. Again, each provincial government manages its estimates process differently, so it makes that comparison somewhat difficult.

David, would you have any more information on that?

[David Moloney]

I can only confirm that the other Westminster parliaments do use a version of supplementary estimates. I can't comment on the relative amounts, except that not all of those Westminster parliament countries are currently in fiscal surplus. Some are; some aren't.

[David Christopherson, NDP, Hamilton Centre, ON]

Then let me approach it this way on the same subject. Over the next few years, do you expect that the trend line is going to plateau and then begin to drop off, or is it going to keep on rising?

[Wayne Wouters]

I think that's very dependent on the priorities set by the government. If the economy continues to run as it does and we're in a surplus situation and the government decides it wants to allocate most of its spending to new spending as opposed to debt relief or tax reduction, then it will be reflected. It will not necessarily be an increase, but you will still see a fairly significant supplementary estimate in the fall.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm sorry to pursue it; it's just that I'm not quite getting what I thought would be straightforward and rather easy answers. Let's put it that way.

Auditor General, every time we raise this, we come back to the issue of the surplus. I understand that. Once you set the budget, you identify the surplus, and then over the course of that fiscal year you identify measures that you want to spend some of that money on, and the only way you can do that, obviously.... I understand that, but in your opinion, what percentage of this increase is answered by being in a surplus situation alone and generating supplementals?

[Sheila Fraser]

We didn't do the specific analysis to see what was new programs and what was carried forward from previous years. I think that would be a worthwhile analysis, perhaps, for the committee. But if you look at the table on page 38, the average during the eight-year period was, I think, 4.5% or something, and the surplus was over 10%. The 4.5% would have certainly been an indication of spending that would have to occur in any case, surplus or deficit, if it was incurring then. I wouldn't say a large percentage of it was probably due to being in a surplus position.

[David Christopherson, NDP, Hamilton Centre, ON]

In your opinion, have we addressed this matter as sufficiently as you'd like to have seen it, given how you raised it in here?

[Sheila Fraser]

I think, as with all the issues we've raised here, that I'll bring it back to the action plan and the plans the secretariat has to address the concerns. That might be, I would think, of interest to the committee going forward.

[David Christopherson, NDP, Hamilton Centre, ON]

I'll call that eight minutes, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Christopherson.

Mr. Fitzpatrick is next.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I want to revisit something that I woke up one night worrying about because it went on so long. It's the question of new government programs in which people do a really lousy job of estimating the cost. Quite literally, if the WestJet pilots and the Air Canada pilots were doing a job of anticipating and estimating like that, I don't think you'd have any sane person flying in an airplane in the country.

The one I'm thinking of is the firearms registry. When the registry was first introduced, my recollection is that the estimated cost of setting it up was $80 million, and it turned out to be $1 billion. A chronic thing that happened almost every year was that 60% or 70% of these costs were coming up as supplementary estimates, and we're not talking about crop failures for which farmers needed special assistance and so on; this was a systematic thing that was going on year after year after year.

This is a committee of accountability, and when we get a really lousy job of estimating like we've had on this gun registry, I want to know who in the system is responsible and accountable for this colossal waste of taxpayers' money. That's the question I have. Surely with the high-priced people we have here today, we should be able to get a clear-cut answer. Who in the system is the one we should be looking at and giving the wet noodle treatment to?