Mr. Speaker, I am honoured to speak in support of full supply for the 1995-96 main estimates.
In the preparation of these main estimates, the government made not only the tough spending and program choices necessary to meet its fiscal targets; equally important, it has taken steps to ensure that control over spending becomes a permanent feature in the management of the government's programs.
As announced by the President of the Treasury Board on February 15, 1995, a new expenditure management system, EMS, is being implemented. This represents the most significant overhaul of the government's expenditure system since the early 1980s.
EMS is a system designed to ensure that we keep spending under control and provide the best programs and services possible within the resources available. Among its key features, EMS emphasizes the ongoing review of programs and managing through reallocations. This is significant because new initiatives as well as most cost increases in existing programs will be financed through reallocation from lower priority programs.
The central policy reserves, which were traditionally a source of funds for new initiatives and did not encourage the ongoing review of existing programs, are being eliminated. A contingency reserve will continue to cover the risk of statutory expenditures exceeding their projections. It would be used, for example, to respond to changing economic conditions. In addition, the Treasury Board will continue to manage a small operating reserve. However, the role of the reserve will be altered from funder to banker. Departments borrowing from the operating reserve will have to repay advances with interest in future years.
In addition, in cases where reallocation is not feasible priorities for access to the operating reserve have been established. In considering requests priority will be given to funding bridge financing projects that offer significant productivity payback, meeting urgent health and safety requirements and protecting the essential integrity of critical programs and the capital asset base.
To ensure that we stay on track and reduce the deficit and meet our fiscal targets program planning will become more closely integrated with the budget planning process. Decisions on new initiatives and major spending reallocations required to finance these new initiatives will generally occur during the annual preparation of the budget.
The establishment of program review and resource allocation as an integral part of the budget process means that the opportunities to propose new spending will be reduced. Ministers are called upon to manage within the resource limits of their respective portfolios.
The government recognizes that funding through reallocation of resources calls for a more strategic approach to resource management at all levels. For this reason, the EMS requires the preparation of departmental business plans. In these business plans, departments are responsible for determining how existing programs must be changed to meet expenditure targets and new government priorities.
The multi-year time frame of business plans will encourage departments to look ahead and examine the major directions and objectives that should be pursued for the planning period, which is the estimates year plus two future years at a minimum.
A major focus of the business plan is the identification of strategies to bring about the major changes and adjustments that are needed. Other elements include the goals, targets, and performance measures that will be used to assess program results and performance information concerning areas affected by the significant changes.
In addition, it is important to note that the business plans take an integrated approach to the management of change by examining all functions that are central to the department in making business adjustments, whether they be financial, human, technological, or capital. Business plans will help departments and central agencies plan in an organized and methodical way to make the adjustments required to get government right during a time of rapid reductions in resources. Furthermore, these plans will enhance the information available to Treasury Board ministers. Decisions on Treasury Board submissions will be made in the context of strategic perspective and clear business direction for each department and agency.
Members of the House of Commons will also be able to review the overall thrust of departmental programs over a multi-year period. In February 1994 the government introduced changes to our Standing Orders of the House of Commons, including Standing Order 81(7), which states:
When main estimates are referred to a standing committee, the committee shall also be empowered to consider and report upon the expenditure plans and priorities in future fiscal years of the departments and agencies whose main estimates are before it.
To assist members of the standing committees in carrying out their responsibility to consider and report on departmental expenditure trends and priorities for future fiscal years, ministers will provide the departmental outlook document directly to the chairpersons of the respective standing committees.
The departmental outlooks are based on the results of the business planning process. They will describe management and operational strategies departments intend to pursue over a multi-year time frame in order to make whatever fiscal and policy adjustments are necessary to deliver government services.
I am confident that parliamentarians will have a better perspective on the issues facing the government and the downstream implications of government spending as a result of the introduction of departmental outlook documents. Departmental outlooks are one example of the government's efforts to improve information available to all parliamentarians on government programs.
The government is also striving to enhance the performance information that is provided to Parliament. In recent years departments and agencies have been developing service standards in order to advise the clients of government programs what level of service they can expect in terms of timeliness, accessibility, reliability and responsiveness, and what action to take if service does not meet these standards. All departments and agencies will have developed standards for their primary services by the end of 1995. The publication of departmental performance in relation to these standards has already begun.
With the expenditure management system parliamentarians have an opportunity to become fully engaged in expenditure planning. Consultation with Parliament is in fact one of the guiding principles of this approach. Parliamentarians will be able to support ministers and their departmental officials in their efforts to reallocate resources and meet our target of reducing the deficit to 3 per cent of gross domestic product by 1996-97.
The government will be consulting us on important initiatives designed to provide better information to Parliament while enhancing the accountability and flexibility of departments in managing their resources. In particular, I would draw your attention to the reform of the estimates currently under consideration. The introduction of departmental outlook documents emphasizes the need to rationalize reporting to Parliament. The current form and context of part III of the estimates and the departmental expenditure plans were derived from information needs defined by parliamentarians over a decade ago. Parliamentarians should now take the time to comment fully on how reporting to Parliament could be improved. The question to consider is how does the government ensure that the part IIIs meet the information requirement of parliamentarians today without placing an undue reporting burden on departments or agencies.
In addition to part IIIs, the reform of the estimates will focus on a number of related issues where changes may be introduced to create flexibilities and incentives for departments to manage their resource requirements through reallocation. The option of increasing the vote threshold for separate capital expenditures, grants, and contribution votes is a good example of the changes being considered in the context of the reform of the estimates.
The current threshold of $5 million was established in consultation with the standing committee on public accounts during the 1970 reform of the estimates. Over the past 25 years the number of separate votes has increased, in part simply as a result of inflation. To expand managers' flexibility to reallocate resources we should consider increasing the threshold at least to a level that would take into account the impact of inflation on capital expenditures, grants, and contributions.
A related option being examined is the possibility of establishing an operating budget vote. Minor capital expenditures are considered to be part of the operating budget. However, for departments and agencies with separate operating and capital votes minor capital expenditures are included in the capital votes. An operating budget vote would allow managers to use the full flexibility of the operating budget to transfer funds between minor capital, operating, and personnel expenditures.
In summary, the new expenditure management system will provide for ongoing review of programs and spending to reduce expenditures and identify opportunities for reallocation to higher priority programs. It includes parliamentary and public input into the budgetary process. It introduces better strategic planning and a process for adjustment programs and services through the implementation of departmental business plans. It also improves accountability through a focus on making better performance information available to Parliament and the public.
I remind members the overhaul of the expenditure management system formalizes the approach the government has taken to decision making on spending, namely financing, through reallocation. It is a major step forward in fostering greater fiscal responsibility and making the best use of taxpayers' money in delivering high quality service to all Canadians.