Public Accounts Committee on Sept. 28th, 2009

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

No strategic contracts with helicopters, equipment...?

[VAdm Denis Rouleau]

That's my next point. From an operations perspective, there is no loss there.

If you then look at the three ADM levels that actually have to come up with a budget, all of the short-fuse items are already funded; they've already been accounted for. The only items we have left, the ones that we're too late in our fiscal year to address, take longer to get moving and therefore to incur the expenses. That is the problem with them.

[The Chair, Liberal, Shawn Murphy]

Thank you.

Mr. Shipley, you have five minutes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman.

Thank you, Madam Fraser, for being here, and also to our guests.

I would like to follow up. This $33 billion in assets, $19 billion or $20 billion in budgets, if you had...?

Ms. Fraser, in your report, you talked about this being one of the largest government departments. What is bigger?

[Sheila Fraser]

Probably in terms of liabilities, Finance, I would think, with all the public debt--

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Okay. Is this the only one, though, that actually--

[Sheila Fraser]

--with transfer payments and things like that. But one of the operational departments would be.... HRSD is obviously very big too, with all the old age security, Canada Pension Plan, and those sorts of things.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

So is it more routine, is it a bit more strategic day to day so you don't have that variation that we would have with Defence and the concern about the $300 million and having the 1%? Do you know what I'm saying? Does Human Resources have the same 5% leeway too?

[Sheila Fraser]

They would have it.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

So is it easier to manage that larger department than it is to manage Defence at 1%?

[Sheila Fraser]

Obviously if you have a margin of 5%, it's much easier to manage than if it's 1%, yes, because as the deputy--

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Clearly, but you raised the concern that if this was at 5%, there very well could be $1 billion.

[Sheila Fraser]

Yes.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Do you know what I'm saying? The reason Mr. Fonberg has a concern, or maybe would like to have the 5%, recognizes the fact that you could have $1 billion. It would seem to me that in the other departments, then, the chances of having that $1 billion is a lower risk because of the nature of the departments. Would that be true?

[Sheila Fraser]

I don't know that I can respond. Perhaps. Certainly things like the transfer payments to the provinces are fairly well known, as with a lot of the programs too, like Canada Pension Plan or things. Those amounts would be fairly easy to predict, so I would think, yes, there is probably more variability in the programs of Defence.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Okay. We seem to be stuck on 1% or 5% and I'm looking actually.... We don't have to have 1% or 5%, but if we're looking for some direction, there are all the variables in between that, and this might be something we want to discuss.

In terms of the amount of dollars that are being spent now, the amount of procurement that is going out now, recognizing I think some of the issues that come out--and maybe you can speak to that--as you have dollars that are going to go out for proposals, you have procurements that you actually think are going to happen in 2008, but we know how procurements sometimes happen, and to meet the requirements of the contracts they don't actually happen that year.... So I don't know how that fits into it.

But it would seem to me that in the military, if you go first to Defence and that almost $35 billion, it's a lot of money going out. And it doesn't take much of a change in a contract or a procurement or for the timing to go off, if I'm right, to be out a few million dollars. Is that part of the issue also, because there is a fast track of replacement of some of the assets, and trying to deal with those within a compressed time of one year?

[Robert Fonberg]

On those issues, we're working with the Department of Finance and the Treasury Board Secretariat, and they have typically been sympathetic to re-profiles, especially of capital-related funding where we have known ahead of the curve and avoided any surprises. So on that money that was available in that year to move a major procurement, where the major procurement wasn't able to move for a variety of reasons, the department has basically said, we know you need that equipment so we will re-profile these funds rather than having you lapse them.

So the significant re-profile issue, based on investment planning, has typically been addressed by the Department of Finance, Mr. Chairman.

[Sheila Fraser]

Mr. Chair, could I add one thing?

[The Chair, Liberal, Shawn Murphy]

Okay, please.

[Sheila Fraser]

I think the deputy mentioned, and we mentioned in the report too, that one of the issues that created the extra surplus was uncertainty of certain funding coming into the department and only getting confirmation of that quite late in the year. That's an issue we've raised in previous reports that we've done on the expenditure management system, where sometimes departments actually get funds confirmed to them almost at year end, and of course it's impossible for them to spend those moneys. So it's the way in which the funding is actually confirmed to departments, too, that has a big impact on this, and not simply the spending within the department.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

And I think spending it responsibly.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Shipley.

Monsieur Paillé, cinq minutes.

[Pascal-Pierre Paillé, Bloc, Louis-Hébert, QC]

Thank you, Mr. Chairman.

I am also a member of the Standing Committee on National Security and Defence, where this subject has already been addressed.

Ms. Fraser, are you aware of any other departments that have an unspent surplus?

[Sheila Fraser]

I would imagine that it has happened elsewhere. Money is either not spent or the authorized funding limit is exceeded. I think that it is fairly common and is probably something that happens every year.

[Pascal-Pierre Paillé, Bloc, Louis-Hébert, QC]

Fine. Thank you.

Let us take a further look at how things are run at the Department of National Defence. Mr. Bachand, my colleague on the Standing Committee on National Security and Defence, raised questions about the rather disorganized approach—if you will forgive me for putting it this way—that the department has towards investment in aviation equipment. It would seem that too much money has been spent on aircraft procurement, and that this could lead to shortages in other areas, for example in land and maritime equipment.

Would you have any information for us on this matter?