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37th PARLIAMENT, 3rd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Thursday, February 26, 2004

1005

The Chair (Mr. Roy Cullen (Etobicoke North, Lib.))

Mr. Dennis Kam (Executive Director, Finance and Administration / Corporate Services Branch, Department of Finance)

The Chair

Mr. Monte Solberg (Medicine Hat, CPC)

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

1010

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mrs. Lynn MacFarlane (Deputy Director, Corporate Management, Department of Finance)

Mr. Monte Solberg

Mrs. Lynn MacFarlane

Mr. Monte Solberg

Mr. Frank Swedlove (General Director, Financial Sector Policy Branch, Department of Finance)

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

1015

The Chair

Mr. Pierre Paquette (Joliette, BQ)

Mr. Frank Swedlove

Mr. Pierre Paquette

Mr. Frank Swedlove

Mr. Pierre Paquette

Mr. Frank Swedlove

Mr. Pierre Paquette

Mr. François Delorme (Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance)

Mr. Pierre Paquette

Mr. François Delorme

Mr. Pierre Paquette

1020

Mr. Pierre Doucet (Chief, Program Payments and Estimates / Federal-Provincial Relations and Social Policy Branch, Department of Finance)

Mr. Pierre Paquette

Mr. François Delorme

Mr. Pierre Paquette

Mr. Pierre Doucet

Mr. Pierre Paquette

Mr. François Delorme

Mr. Pierre Paquette

Mr. François Delorme

The Chair

Ms. Sophia Leung (Vancouver Kingsway, Lib.)

Mr. Pierre Doucet

Ms. Sophia Leung

Mr. Pierre Doucet

Ms. Sophia Leung

Mr. Pierre Doucet

Ms. Sophia Leung

1025

Mr. Pierre Doucet

Ms. Sophia Leung

Mr. Pierre Doucet

The Chair

Mr. Pierre Doucet

Ms. Sophia Leung

Mr. Pierre Doucet

Ms. Sophia Leung

Mr. Pierre Doucet

Mr. Peter DeVries (Director, Fiscal Policy Division, Economic and Fiscal Policy Division, Department of Finance)

Ms. Sophia Leung

Mr. Dennis Kam

Ms. Sophia Leung

Mr. Dennis Kam

Ms. Sophia Leung

Mr. Dennis Kam

Ms. Sophia Leung

The Chair

1030

Mr. Peter DeVries

The Chair

Mr. Peter DeVries

The Chair

Hon. Robert Thibault (West Nova, Lib.)

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Mr. Peter DeVries

Hon. Robert Thibault

Mr. Dennis Kam

1035

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Dennis Kam

Hon. Robert Thibault

Mr. Peter DeVries

Hon. Robert Thibault

Mr. Peter DeVries

Hon. Robert Thibault

The Chair

Mr. Alex Shepherd (Durham, Lib.)

Mr. Peter DeVries

Mr. Alex Shepherd

Mr. Peter DeVries

Mr. Alex Shepherd

Mr. Peter DeVries

Mr. François Delorme

1040

Mr. Alex Shepherd

Mr. François Delorme

Mr. Alex Shepherd

Mr. François Delorme

Mr. Alex Shepherd

Mr. François Delorme

Mr. Alex Shepherd

Mr. François Delorme

Mr. Alex Shepherd

Mr. François Delorme

Mr. Alex Shepherd

The Chair

Mr. Alex Shepherd

Mr. Frank Swedlove

Mr. Alex Shepherd

Mr. Frank Swedlove

1045

The Chair

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Frank Swedlove

Mr. Monte Solberg

Mr. Frank Swedlove

Mr. Monte Solberg

Mr. Frank Swedlove

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Frank Swedlove

Mr. Monte Solberg

Mr. Frank Swedlove

Mr. Monte Solberg

Mr. Frank Swedlove

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

Mr. Dennis Kam

Mr. Monte Solberg

1050

Mr. Monte Solberg

The Chair

Mr. Dennis Kam

The Chair

Mr. Pierre Paquette

Mr. Dennis Kam

Mr. Peter DeVries

The Chair

Mr. Peter DeVries

The Chair

Mr. James Ralston (Interim Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Customs and Revenue Agency)

The Chair

Mr. Rahim Jaffer (Edmonton—Strathcona, CPC)

1100

Mr. Stephen O'Connor (Deputy Assistant Commissioner, Finance and Administration Branch, Canada Customs and Revenue Agency)

Mr. Rahim Jaffer

Mr. Stephen O'Connor

Mr. Rahim Jaffer

Mr. Stephen O'Connor

Mr. Rahim Jaffer

Mr. Stephen O'Connor

Mr. Rahim Jaffer

Mr. Stephen O'Connor

Mr. Rahim Jaffer

Mr. Stephen O'Connor

Mr. Rahim Jaffer

Mr. Stephen O'Connor

Mr. Rahim Jaffer

The Chair

Mr. Pierre Paquette

1105

Mr. Stephen O'Connor

Mr. Pierre Paquette

Mr. James Ralston

Mr. Pierre Paquette

Mr. Stephen O'Connor

Mr. Pierre Paquette

Mr. Stephen O'Connor

Mr. Pierre Paquette

Mr. Stephen O'Connor

The Chair

Hon. Eleni Bakopanos (Ahuntsic, Lib.)

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

Mr. Stephen O'Connor

The Chair

Hon. Eleni Bakopanos

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

1110

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

Mr. Stephen O'Connor

Hon. Eleni Bakopanos

The Chair

Hon. Robert Thibault

Mr. Stephen O'Connor

Hon. Robert Thibault

Mr. Stephen O'Connor

Hon. Robert Thibault

Mr. Stephen O'Connor

Hon. Robert Thibault

Mr. Stephen O'Connor

Hon. Robert Thibault

Mr. Stephen O'Connor

Hon. Robert Thibault

Mr. Stephen O'Connor

Hon. Robert Thibault

Mr. Stephen O'Connor

Hon. Robert Thibault

The Chair

Hon. John McKay (Scarborough East, Lib.)

1115

Mr. Stephen O'Connor

Hon. John McKay

Mr. Stephen O'Connor

Hon. John McKay

The Chair

Mr. Rahim Jaffer

The Chair

Mr. Rahim Jaffer

The Chair

CANADA

Standing Committee on Finance

NUMBER 004

3rd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, February 26, 2004

[Recorded by Electronic Apparatus]

À (1005)

[English]

The Chair (Mr. Roy Cullen (Etobicoke North, Lib.)): Can we call the meeting to order, please.

We're here today, pursuant to Standing Order 81(5), on supplementary estimates (B) for the fiscal year ending March 31, 2004: votes 1b, 16b, 25b, and 30b under the Department of Finance, and vote 1b under the Canada Customs and Revenue Agency.

Being that it's February 26, I'm sure that if the committee finds that the estimates are exceeding what would be appropriate, there's ample time to take the action to rectify the situation.

Anyway, I'm happy to have representatives here from the Department of Finance and also from Canada Customs and Revenue Agency.

Who is here from the Canada Customs and Revenue Agency? Is there anyone? They're coming at 11 a.m. Fine.

So we're starting first with Finance Canada, and we have Peter DeVries, director, fiscal policy division, economic and fiscal policy branch; Frank Swedlove, assistant deputy minister, financial sector policy branch; and Dennis Kam, executive director, finance and administration, corporate services branch. I think that's all we have for the moment. There might be other people who could be called upon, as you so wish.

With that, how does the committee wish to proceed? Maybe we could have the officials speak briefly to the supplementary estimates (B) and then have a question and comment period.

Please proceed.

Mr. Dennis Kam (Executive Director, Finance and Administration / Corporate Services Branch, Department of Finance): Thank you, Mr. Chairman.

I have a brief introduction.

We will have other colleagues joining us. They may be caught in security.

We are very pleased to be here today to address any questions the committee may have on Finance Canada's supplementary estimates.

You will note that in the body of the text on page 83, starting on the next several pages, we have adjustments or items in supplementary estimates for three programs: the economic, social, and financial policies program, which in fact is a net reduction of $16.4 million; and then we have an adjustment in the public debt forecast, a reduction of $1.4 billion; and then several adjustments to the statutory forecasts for the federal-provincial transfer programs, with a net total of $4.7 billion increase.

We have officials here who can speak to each of these programs, as you request. Because I noticed in your notice of the meeting that you wished to address the operating votes of the trade tribunal and the Financial Transactions Reports Analysis Centre of Canada, we have officials from those agencies here as well.

Thank you, Mr. Chairman.

The Chair: We welcome François Delorme, director, federal-provincial relations and social policy branch, Finance Canada; and Mr. Pierre Doucet, chief, program payments and estimates, federal-provincial relations and social policy branch, Finance Canada.

Mr. Kam, you're finished your presentation, so we can begin with some questions.

Mr. Solberg, for a 10-minute round.

Mr. Monte Solberg (Medicine Hat, CPC): In vote 1b, $13 million was transferred to economic, social, and financial policies operating expenditures, yet the objects of expenditures seem to indicate that you only need $9.293 million. Why is there a $3.8 million discrepancy in that?

Mr. Dennis Kam: In this particular case, the object of expenditure nets out the adjustment to the purchase of domestic coinage, which is the $3.8 million. So if you take the sum of the first few items, vote 1 totals, as you said, $13.2 million, and then you net against that the reduction in purchase of domestic coinage, you get the $9.293 million.

Mr. Monte Solberg: All right.

There's also a $12.5 million advised forecast of payments to the IMF Poverty Reduction and Growth Facility, and that's a big switch from the main estimates. What determines our level of commitment to that program? That's on page 84.

Mr. Dennis Kam: This item was in fact paid in the last fiscal year. That's why it's not required this year. These payments are made pursuant to commitments made to the IMF under the Poverty Reduction and Growth Facility and it's contained in statute. That's why it's a statutory payment. As I said, the payment was made last year, at the very end of the year, in March after the main estimates had been tabled for this particular year.

Mr. Monte Solberg: All right.

Now, there is $2.735 million for transportation and communications. Can you fill out what exactly that is and give me a rough idea of where the biggest chunks of that went?

Mr. Dennis Kam: I don't have the detail to be able to do that. I can probably indicate that the majority of it would have been allocated to the first item, carrying out policy development reforms. That would probably be the primary item entailed in that.

Mr. Monte Solberg: But you don't have any detail on that?

Mr. Dennis Kam: Not with me, no, I don't. We can certainly give you that. If you wish, we can submit that to the chair.

Mr. Monte Solberg: Yes, that's what I was hoping to get today, some of that in a little bit more detail, and the same thing applies with professional and special services, which is $6.4 million.

Mr. Dennis Kam: Again, we can give you that.

I could point out, Mr. Chair, that these are initial plans. When we distribute these funds across the operating objects, we don't control managers at that level. We control them at a bottom-line level, so they're free to reallocate those funds.

À (1010)

Mr. Monte Solberg: I see what you're saying.

Mr. Dennis Kam: So these are indicative of what we're likely to spend--we expect to spend--based on historical patterns. The actuals could vary, but this is our expectation of how it will break out. Certainly this is based on an analysis of each individual item, and we can provide that.

Mr. Monte Solberg: Yes, I'm interested in those two in particular.

In vote 1 there is also $197,000 for operating costs to negotiate and implement aboriginal land claims and self-government agreements. We have departments devoted to that, so I'm wondering why Finance is involved in that.

Mr. Dennis Kam: It's from the dimension of our tax policy experts, so this is going to the tax policy branch to provide advice and be involved in the negotiations on the tax implications of some of these land claim agreements.

Mr. Monte Solberg: All right.

In vote 30b you're requesting an additional $1.5 billion for the Financial Transactionsand Reports Analysis Centre of Canada. The explanations for those funds are similar to items in vote 1b. Can you give us some idea of what the specific use of those resources is for?

Mr. Dennis Kam: Ms. Lynn MacFarlane, the deputy director of corporate management in the agency, is here to speak to vote 30b, and then Mr. Swedlove can address the finance dimension, because they're two different agencies with different responsibilities.

Mrs. Lynn MacFarlane (Deputy Director, Corporate Management, Department of Finance): Good morning.

Mr. Monte Solberg: Good morning.

Mrs. Lynn MacFarlane: All this is, is our carry-forward amount. Every department and agency has an ability to carry forward up to 5% of their budget in any given fiscal year, so the amount you have before you is basically our carry-forward amount, as we are permitted under the Financial Administration Act.

Mr. Monte Solberg: Was Mr. Swedlove going to offer something?

Mr. Frank Swedlove (General Director, Financial Sector Policy Branch, Department of Finance): If you're talking about the actual FINTRAC numbers that are on page 89, they are related specifically to the agency and are independent of the Finance numbers.

There is a number on page 83 of a little over $2 million for public security and anti-terrorism initiatives, which involves $1.2 million allocated to the financial crime section of the Department of Finance to prepare anti-money-laundering and anti-terrorism financing legislation and regulations and for input into our participation in international meetings like the G7, the G8, and the Financial Action Task Force. Also, there is $0.8 million for policy and legislative work relating to the air travellers security charge, along with an ongoing review of the charge.

Mr. Monte Solberg: Go ahead, Mr. Kam.

Mr. Dennis Kam: I just wanted to point out, Mr. Chair, that Finance Canada also has an operating budget carry-forward item of $4.5 million.

On page 51 of this book is a list of all departments that are getting operating budget carry-forward, and it's virtually every department and agency, for a total of $288.5 million. It's all pursuant to Treasury Board policy.

Mr. Monte Solberg: I've run through some of the questions I wanted to ask, but I just want to emphasize again that I would like to get some more details on the $2.7 million for transportation and communications and the $6.4 million for professional and special services.

Thank you.

À (1015)

The Chair: Just on a point, the information was requested yesterday through Finance Canada. I don't know if you got that message. I don't know who we contacted, but if you could send that information to the chair, we'll distribute it to the members.

Monsieur Paquette.

[Translation]

Mr. Pierre Paquette (Joliette, BQ): Good day. I apologize for being a little late. I hope the questions I'm about to ask you haven't already been asked by my eminent colleague.

First off, I want to know how the $5.8 million earmarked for formulating a policy to reform the Canadian Securities Regulation will be used. To my knowledge, securities come under provincial jurisdiction and I'm wondering how the federal government plans to spend $5.8 million in a field that falls under provincial jurisdiction.

[English]

Mr. Frank Swedlove: The previous Minister of Finance last year decided to establish a committee called the Wise Persons' Committee to take an independent look at securities regulation in Canada. There has been a great deal of desire by those people who use the securities system in Canada--the issuers of securities, investors in Canada--who believed there was a need for reform in securities regulation. So the previous Minister of Finance established this Wise Persons' Committee and asked them to, over a nine-month period, look at options for reform of securities regulation in Canada. The vast majority of this amount, almost $5 million, relates to the establishment of this Wise Persons' Committee to carry out the review.

[Translation]

Mr. Pierre Paquette: But why the need for supplementary estimates for this year? Do you know the overall cost of this Wise Persons' Committee?

[English]

Mr. Frank Swedlove: This committee was established, the decision to have this committee was taken, after the main estimates were tabled. Therefore, it's part of the supplementary estimates.

[Translation]

Mr. Pierre Paquette: It's just that the report has already been tabled.

Mr. Frank Swedlove: Yes, it was tabled in December.

Mr. Pierre Paquette: Equalization is a mystery to many people. I see here that the amount earmarked for equalization has been reduced this year by $694 million. That's money that has not been spent. I'm curious as to how this process works. In the Finance Department estimates tabled this week, this sum earmarked for equalization is about $2 billion less than last October's projections. What's going on exactly?

The votes for next year refer to $500 million in additional resources. Over and above what amount?

I'd like you to explain to me how you arrived at this figure of $694 million and how this amount is tied to a reduction of $2.2 billion, if memory serves me well, over last October's projections. When you talk about $500 million in additional funds for next year, what figure is this in addition to?

Mr. François Delorme (Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance): Equalization is calculated twice yearly. The figures used to draw up the supplementary estimates are figures for the month of October. The figures to which you're referring and which were released Monday represent the second step, if you like. Equalization is calculated in October and in February. The numbers appearing in the supplementary estimates are based on the October projections and the $2.2 billion figure to which you alluded is included in the figures released on Monday. These amounts represent the February projections which will be reflected in the next budget.

Mr. Pierre Paquette: I see. Therefore, if I understand right, the reference to $500 million in supplementary estimates in the other book refers to the $600 million decrease in...

Mr. François Delorme: Don't you mean $694 million?

Mr. Pierre Paquette: Yes. The overall amount is $694 million less than projected. For the coming year, an additional $500 million has been earmarked. I suppose this amount is not directly included in the supplementary estimates. I'm trying to get a better understanding of this complicated equalization process. Why are you planning for an additional $500 million? Are you expecting the Ontario economy to improve?

À (1020)

Mr. Pierre Doucet (Chief, Program Payments and Estimates / Federal-Provincial Relations and Social Policy Branch, Department of Finance): This projection is for 2004-2005. These are not October projections, but rather figures that reflect normal program growth. The process is set out in the legislation. Previous years do not come into play. These are equalization amounts to which the provinces will be entitled in 2004-2005, amounts that reflect normal program growth.

Mr. Pierre Paquette: I see. I would also like some clarification on the figures pertaining to the Canada Health and Social Transfer. The transfer has been separated in two. I imagine the next budget will reflect that reality.

Mr. François Delorme: This new initiative takes effect on April 1.

Mr. Pierre Paquette: On the subject of health, the Canada Health and Social Transfer, which now totals $19 billion, will be increased by $25 million. How will this amount be divided between the health and other fields? I'd also like some clarification about the Canada Health and Social Transfer Supplement Trust and the Diagnostic and Medical Equipment Trust. Which items come under the regular Transfer, and which come under the February 2002 Accord?

Mr. Pierre Doucet: Could I possibly forward that information to you at a later date?

Mr. Pierre Paquette: Of course. I was my understanding that for the upcoming year, that is 2004-2005, transfers to Quebec under the February 2002 Accord would total barely $365 million. I would have liked to have these figures clearly explained to me.

Mr. François Delorme: Are you talking about February 2002 or February 2003?

Mr. Pierre Paquette: Was it 2001? I'm not sure. In what year was the accord between Mr. Chrétien and the first ministers signed?

Mr. François Delorme: In 2003.

[English]

The Chair: If that is new information, you can send it through the chair and we can distribute it to all the members.

Thank you.

Ms. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): Thank you, Mr. Chair.

I have a couple of questions.

On page 86 you have $614 million on the youth allowance recovery. Could you tell me what you are referring to? Can you find it? It's 2003-04. I'm not very clear on what the youth allowance recovery is. Is that federal and provincial?

Mr. Pierre Doucet: The youth allowance recovery program dates back to 1974, I believe, and it was an abatement that was provided to Quebec at the time, instead of doing another similar program. Since then, the program has been repealed. We allow Quebec to keep the tax abatement, but we are recovering it each year.

Ms. Sophia Leung: It's only for Quebec, and no other provinces?

Mr. Pierre Doucet: Yes. So providing the abatement to Quebec at the time did not benefit Quebec in any way, shape, or form. It was the same amount as the other provinces were receiving, except they were able to collect the taxes instead of receiving the money from the federal government. Since this has been repealed, we are recovering it each year from Quebec. That's shown on the expenditure side as a recovery.

Ms. Sophia Leung: This is from the provincial...

Mr. Pierre Doucet: It's from Quebec.

Ms. Sophia Leung: What's the average annual recovery?

À (1025)

Mr. Pierre Doucet: It's about what you see there. It increases by about 5% a year, depending on the growth rate of the basic federal tax. That's the basis of the calculations.

Ms. Sophia Leung: So every year you anticipate recovery.

Mr. Pierre Doucet: Absolutely.

The Chair: Explain how a recovery is shown as an expenditure.

Mr. Pierre Doucet: I'm not an expert in accounting, but in the past, youth allowances were an expenditure item. They decided to keep it there, but as a recovery under expenditures, so it really reduces the expenditures

Ms. Sophia Leung: Why should it be an expenditure?

Mr. Pierre Doucet: Again, I'm not an expert on how and why these things were classified that way.

Ms. Sophia Leung: Could you clarify that later?

Mr. Pierre Doucet: We could certainly clarify these three things.

Mr. Peter DeVries (Director, Fiscal Policy Division, Economic and Fiscal Policy Division, Department of Finance): Maybe I can add something to it. As Mr. Doucet said, when this program was first initiated back in 1974, the provinces had the option of either receiving direct transfers from the federal government, or receiving tax abatements, whereby the federal government would transfer tax points to the provinces with respect to what they otherwise would have received through direct transfers. Only Quebec took up the option. So in essence they were being paid in two parts: direct transfers to the provinces that wanted them, and through tax point transfers to Quebec.

When the program was eliminated--and I forget which year it was--of course we were no longer making direct payments to the provinces. But because we did not pull back the tax points from Quebec, we had to find a mechanism for recovery. Under our system of financial statements, those types of recoveries show up as negative expenditures. You'll see that in a number of other cases. When you take a look at the public accounts, they do not show up as netted against revenues; they show up as negative expenditures.

Ms. Sophia Leung: On page 87 you have professional and special services, and that's also on the next two pages. Could you be more specific and explain what they are?

Mr. Dennis Kam: It's actually a list of about 50 different items that are coded under this category of spending. But the classic case is the service contracts, where we hire consultants to give us advice or to carry out something. Temporary help services are coded under there, and costs for contracting with doctors or lawyers get charged to that as well.

Ms. Sophia Leung: They are federal contracts.

Mr. Dennis Kam: Yes. The departments engage in contracts, or purchase professional services, and they're coded to this category of expenditure. As I say, one can drill down into the detail below this, and there are probably about 50 individual items that comprise this particular category of spending. Details can be found in the public accounts of Canada as well.

Ms. Sophia Leung: If it's just by contract, how do you derive this estimate? Is it annually?

Mr. Dennis Kam: An estimate is made within the main estimates of expenditures by each of these objects of expenditure for each program. The estimate is based on historical experience in what is likely to be spent on travel, transportation, communications, information, and professional special services.

Typically, individual managers will budget in accordance with these objects of expenditure. They'll set out their budgets based on historical practice as to what they've spent the previous years on professional services. We code every financial transaction into our financial system on the basis of these objects of expenditure.

Ms. Sophia Leung: Thank you, Mr. Chair.

The Chair: Thank you.

Before I turn it over, not to become dogmatic about this, but my accounting training is coming out in debits and credits and brackets and no brackets.

On the youth allowances recovery, Mr. DeVries, if you said it's a recovery and it's a credit against expense, then wouldn't it have brackets around it, like the reduction and equalization?

À (1030)

Mr. Peter DeVries: Mr. Chairman, the youth recovery allowance does have a bracket around it. The original estimate was for $614 million. That's what was in the main estimates for 2003-2004.

The Chair: Oh, I see.

Mr. Peter DeVries: There has been a re-estimation and now it has been lowered.

The Chair: A re-estimation. Okay, sorry. Thank you.

Monsieur Thibault.

Hon. Robert Thibault (West Nova, Lib.): Thank you.

Most professions have a terminology for themselves to keep the rest of us out of it. Economists talk about negative growth. This is the first time I've heard about negative expenditure, as opposed to revenue. It seems that in the interest of transparency, so that people can actually pick up the documents and see what's going on, it might make sense to find something that's more common to the English or the French language than that type of term.

The 5% carry-forward...as a matter of policy, does each manager have to justify it? Does the department have to justify, go through the Treasury Board process, that the carry-forward is going to be used for purposes that are consistent with government or departmental policy, or is it automatic?

Mr. Dennis Kam: It is automatic. The policy sets out that an entitlement of up to 5% of the operating funds in the fiscal year can be carried forward to the next fiscal year if they're lapsed. The funds have to lapse.

The department has support through public accounts, effectively, that the money has lapsed. Then an amount of up to 5% of the main estimates operating book could be brought forward the next year. Obviously, the money has to be spent within the mandate and the legal authorities of the department. It cannot be spent for other purposes.

Hon. Robert Thibault: Thank you.

For the payment to international monetary growth, you had estimated $12.5 million. You're reducing that limit by $12.5 million, so that there would be no payment? Am I understanding that correctly?

Mr. Dennis Kam: There is no estimated forecast payment this year because the payment was made last year.

Hon. Robert Thibault: Okay, so we've paid in advance. We've met our commitment to that fund. We don't need it to be there.

Mr. Dennis Kam: Yes, that's right.

Hon. Robert Thibault: On page 84 of the audit of economic, social, financial--I think Mr. Solberg might have got at this--there's a bracketed $2.6 million for materials and supplies. Am I to understand that you've spent that much less than you had forecast?

Mr. Dennis Kam: It's a revised forecast because there has been a reduction in the forecast spending on the purchase of domestic coinage. Therefore, there are reduced requirements to buy the materials that are used for the coins.

Hon. Robert Thibault: Okay. That wouldn't be sale of assets or anything?

Mr. Dennis Kam: No, that's actually the materials and the services required to produce coins. We going to spend less on coins, on the manufacture of coins, and the costs are down.

Hon. Robert Thibault: This isn't a negative expenditure?

Mr. Dennis Kam: No, it's revised--my revised forecast vis-à-vis the main estimates forecast.

Hon. Robert Thibault: Thank you.

What else was I looking at?

The health and social transfer supplement trust, diagnostic medical equipment trust, and health reform were all commitments of the federal government after the main estimates had been done, so they wouldn't have been part of the budget.

Mr. Dennis Kam: That's correct. They were in last year's budget, which is last year's budget in February. Of course, the main estimates were tabled the same month. The main estimates get printed several weeks before they're tabled. At that point, things get locked in and supplementary estimates are used to make adjustments then.

Mr. Peter DeVries: As an additional point to that, Mr. Chairman, the estimates can only include those things on the statutory side for which there's enabling legislation. These three items were included in the 2003 budget legislation, which wasn't passed until June 2003, after the main estimates. They can only come into effect after they have been passed or receive royal assent.

Hon. Robert Thibault: Now on a question like recovery, part of that budgetary process, there was a $1 billion recovery where each department was asked to contribute a certain amount. Would that appear in the same way? If your department had some recoveries, would it appear as supplementary again?

Mr. Dennis Kam: Generally, that wouldn't be explicit in the supplementary estimates because those funds would be frozen by Treasury Board. If a department identifies a contribution to the $1 billion target reduction, the money gets frozen by Treasury Board and it is forced to lapse. It appears in public accounts as a larger lapse.

It may be used in the supplementary estimates by the Treasury Board to reduce the new appropriations required, and there's an offset there. That may be the case in some of these. I know it's not the case in our supplementary estimates, but it may be in some of the other departments.

À (1035)

Hon. Robert Thibault: If it had been, it wouldn't appear as a separate item.

Mr. Dennis Kam: No, it wouldn't. It would reflect funds available within the vote because of a government decision.

Hon. Robert Thibault: In the Auditor General's section there are almost $3.7 million in new appropriations. Some of this is for professional and special services and transportation and communications. We'd like to see the details for those types of things. Are they tendered? Is there a tendering process?

Mr. Dennis Kam: I'm afraid I wouldn't dare try to speak to the Auditor General's estimates. The Office of the Auditor General would have to respond to that. I'm sure they can give you that sort of detail, if the clerk were to make the request.

Hon. Robert Thibault: But it appears under your estimates.

Mr. Dennis Kam: It's in the portfolio of the Ministry of Finance. The Office of the Auditor General is placed in the Ministry of Finance for convenience purposes. There's no direct relationship.

Hon. Robert Thibault: So you don't respond to the estimates of the Auditor General in that section.

Mr. Dennis Kam: No, we don't. We don't review them. We don't see them, and we don't sign off on them.

Hon. Robert Thibault: You don't get to audit the auditor.

Mr. Peter DeVries: Mr. Chairman, the estimates for the Auditor General are reviewed by the public accounts committee.

Hon. Robert Thibault: How come they wouldn't come to this committee?

Mr. Peter DeVries: The reason for it is that in order for a department, a minister, or in this case the Auditor General to make a submission to Treasury Board, they need a signing minister, and it just happens that the Minister of Finance is the signing minister for the Auditor General. However, the Auditor General does not report to the government; she reports to Parliament. As Mr. Kam said, it's just an issue of convenience. She needs a signing minister, and it just happens to be our minister. But she reports to Parliament, and she does so through the public accounts committee.

Hon. Robert Thibault: Thank you.

The Chair: Thank you.

Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): I'm interested in the statutory allocations for the Canada health and social transfer. I'm going to start off with a dumb question: why does that say $2.5 billion when in fact the legislation we just passed the other day was for $2 billion?

Mr. Peter DeVries: The $2.5 billion that's included in these supplementary estimates relates to the 2003 health accord, where the government committed to give the provinces an additional $2.5 billion. In addition to that, the government said at that time that if the surplus was in excess of $3 billion at the end of 2003-2004, they would give the provinces an additional $2 billion. Since that time the government has said we're going to remove that condition, and we will pay the provinces $2 billion at the end of this year. The legislation that is going to Parliament right now asks for authority for that $2 billion. So they're two separate amounts of money.

Mr. Alex Shepherd: I'm just trying to get the accountability. That $2 billion isn't going to show until next year's estimates. Is that what you're saying?

Mr. Peter DeVries: It depends on whether or not the legislation receives royal assent in this current fiscal year. If it does, it will show up in the public accounts. If not, it will show up in the estimates next year.

Mr. Alex Shepherd: Okay. Good answer.

When we gave this original $2.5 billion, it also came under the social union framework agreement with the provinces. Within that there was an accountability aspect. As I recall, the provinces were supposed to ensure that money was expended on health care. Since you're the disbursing agent of this money, have you gone back and assured yourself that the money was expended under the terms of the SUFA agreement?

Mr. Peter DeVries: I'll let Mr. Delorme answer that one.

[Translation]

Mr. François Delorme: The provinces were supposed to issue reports on the expenditures they incurred, but I don't know if these reports were in fact released. I'll have to get back to you on that.

À (1040)

[English]

Mr. Alex Shepherd: In my mind it seems kind of basic. We're all into accountability today. You're showing me here that you want a supplementary estimate for $2.5 billion, but you can't tell me whether in fact the money has been expended under the terms of the agreement we have entered into.

[Translation]

Mr. François Delorme: If you like, I can get back to you later today and let you know which provinces issued reports and which ones did not.

[English]

Mr. Alex Shepherd: By the nature of your answer, you're telling me that some provinces have not complied.

[Translation]

Mr. François Delorme: I'll have to check. You're correct in that pursuant to the Social Union Framework Agreement, provinces were supposed to held accountable, meaning that they were required to open their books and submit a report detailing how the money was spent. I'm not sure which provinces complied. I believe reports were filed, but I'll give you a more definitive answer later, so as not to mislead the committee in any way.

[English]

Mr. Alex Shepherd: To complete that questioning, the other day we were asked to give them an additional $2 billion. We still don't know whether in fact the $2.5 billion we're giving them through these supplementary estimates was actually expended for what we agreed on. We're talking about large amounts of money here.

Mr. François Delorme: Well, I'm not saying that it hasn't.

Mr. Alex Shepherd: It seems to me that's what the taxpayers in this country want to know.

Mr. François Delorme: I understand.

Mr. Alex Shepherd: You are going to get that.

Mr. François Delorme: Yes.

Mr. Alex Shepherd: Okay.

Do I have some more time?

The Chair: Yes.

Mr. Alex Shepherd: Getting into the Canadian securities regulations, I'm kind of interested in that aspect and where we're going. Some people in this country think we should have a national securities commission.

I'm assuming there is some other thought process, a sort of background on it. I know you're looking at the entire securities industry in Canada and how it could be rationalized to try to deal with the provinces. The background of that must be that there is the possibility that there could be a national securities commission.

Has there been any thought put into what additional liabilities could be incurred by the federal government regarding that aspect?

Mr. Frank Swedlove: When it was decided that we were going to have an independent group examine securities regulations to come forward with recommendations and options, there was no preconceived notion as to what might be the best way to proceed. The committee, in tabling its report, suggested establishing a single securities commission where there would be participation by both the federal and provincial governments.

That is now subject to discussion that's taking place between federal and provincial ministers and officials. There is general agreement by all ministers, both federal and provincial, that the existing securities regulatory structure can be improved, and indeed must be improved. The question is more on how best to improve it and what the best model is to proceed with. There are discussions that are taking place.

If the federal government were to be involved in going forward to establish a new securities commission for Canada, then obviously there would be extra expenditures incurred to do that. At this point in time, we project some money to continue to work on the file, but not the kind of money that may be necessary to establish a national securities commission.

Mr. Alex Shepherd: I am concerned about liability more than anything else. Has there been some kind of a study on what liability the federal government could be incurring if it entered into this agreement?

I know that's hypothetical, but I am assuming there is somebody out there trying to think about some of these things before they happen.

Mr. Frank Swedlove: The existing approach noted by the Minister of Finance is that he wants to work with his provincial colleagues to come to a mutual agreement. Any kind of new structure would have to meet the constitutional test, essentially. Therefore, there will be a lot of work among federal and provincial officials to find something that would eliminate possibilities of liability occurring.

À (1045)

The Chair: Thank you.

We'll have a final round.

Mr. Solberg.

Mr. Monte Solberg: Thank you, Mr. Chair.

I'm curious to know about polling. I assume—and we know—that the Department of Finance does polling, but does polling end up in the professional and special services envelope?

Mr. Dennis Kam: Yes.

Mr. Monte Solberg: Do you have a rough idea of what the total for polling would be in the supplementary estimates?

Mr. Dennis Kam: No, I don't.

Mr. Monte Solberg: All right. So that's some of the information we'll need to get.

Mr. Dennis Kam: I don't expect that any of that is in these supplementary estimates, but we can look at that and report it as well.

Mr. Monte Solberg: The other thing I was going to ask about was advertising. I see these CDIC ads on television. As an aside, I don't see the Bank of Canada in here anywhere either. And I don't see CDIC in here, and I'm just curious to know where that money comes from.

Mr. Frank Swedlove: The Canada Deposit Insurance Corporation is a separate crown corporation, which would have its own funding. It's managed by a board of directors, and it would take decisions with respect to advertising campaigns—

Mr. Monte Solberg: But which department oversees CDIC?

Mr. Frank Swedlove: The Minister of Finance oversees the CDIC.

Mr. Monte Solberg: But it's not in here.

Mr. Frank Swedlove: No, the CDIC's funds.... It's not an appropriation of funds—

Mr. Dennis Kam: It's self-financed.

Mr. Monte Solberg: It's self-financing, so it doesn't show up in here. Is it the same with the bank?

Mr. Dennis Kam: The bank pays dividends—

Mr. Monte Solberg: No, I understand that we're making money from the bank.

Mr. Frank Swedlove: But the CDIC receives premiums that are paid by deposit-taking institutions, and that is what is used by it to cover its costs.

Mr. Monte Solberg: So when they're running ads, that comes right out.... It's all self-contained, basically.

Mr. Frank Swedlove: That's correct.

Mr. Monte Solberg: But when we ask you to review the estimates, how do we get a look at what CDIC is doing?

Mr. Frank Swedlove: Well, they would do an annual report. In their annual report they would list the costs associated with their operations, and those are around $40 million a year in operations.

Mr. Dennis Kam: The government tables an annual report on crown corporations, and the committee could...pursuant to that report.

Mr. Monte Solberg: Yes, I understand, but when you look through the supplementary estimates and you look at Heritage, all the different crown corporations are listed under it, and when you look at Finance, they don't have them listed.

Mr. Dennis Kam: It's because they're appropriation dependent in Heritage, whereas in Finance they're not appropriation dependent. The estimates deal with the appropriation bill that has to be put to Parliament seeking spending authority, whereas those agencies do not require spending authority.

Mr. Monte Solberg: All right.

Just so I understand this, the question I had about the Auditor General was that the Auditor General is only listed because you needed a signing minister, but when it comes to the Auditor General requesting more funds to do her work, you're telling me she makes that request directly to.... How does she make that request?

Mr. Dennis Kam: She would prepare a Treasury Board submission, which would be signed by the Minister of Finance as the transmitting minister, and the Treasury Board Secretariat would review that submission and make recommendations to the Treasury Board. There would obviously be a process of consultations and negotiations with the Office of the Auditor General on that.

Mr. Monte Solberg: Yes, because that's a pretty important process. Obviously, one way to really inhibit the work of the Auditor General would be to deny enough funds, right? So what's the oversight of that? There is no parliamentary oversight of that.

The Chair: The public accounts committee.

À (1050)

Mr. Monte Solberg: No, I understand, but what is the oversight of the process to request more funds? Is it the public accounts committee?

The Chair: As I understand it, there's a process in which the public accounts committee always asks the Auditor General if she or he has sufficient funds to perform their mandate, and they ask for that report in terms of their resourcing requirements. So that is tabled, as I understand it, at the public accounts committee.

Mr. Dennis Kam: Obviously there's an oversight by the Treasury Board Secretariat, as for all departments, to ensure that any proposal coming forward for incremental funding is soundly based, properly costed, and one would expect that for the Office of the Auditor General. Nonetheless there is a pushback on those things. Ultimately, the heads of the departments or agencies can report to Parliament that they do not have sufficient funds to carry out their mandate.

I'm certain that the Treasury Board Secretariat is very sensitive to the concern you expressed and there's a very open discussion with the Auditor General's office.

The Chair: Thank you.

Mr. Paquette, a very small question, and then we're going to wrap up.

[Translation]

Mr. Pierre Paquette: I have a question in a similar vein. I realize it's different in the case of Crown corporations, but can you tell me to which departments the six or seven foundations created by Mr. Martin in fact report?

[English]

Mr. Dennis Kam: There is a variety.

Mr. Peter DeVries: There is a variety of foundations. Most of them are under Industry Canada. The Millennium Scholarship Foundation comes under the human resources department, the new social department. The Canadian Foundation for Innovation comes under Industry Canada. Genome Canada comes under Industry Canada. So it depends upon the nature of the activity that the foundation is involved in as to which minister they then report to.

The Chair: Thank you.

I have a comment. It's nice to see estimates being reduced, the public debt program, $1.4 billion. I know the department and the government are managing the debt profile to make it more stable, and of course to take advantage of lower interest rates.

It says here “lower interest rates and interest savings on currency”. Is that some type of hedging gain or currency gain? Could you describe the $1.4 billion in a little more detail for us?

Mr. Peter DeVries: Mr. Chairman, most of the revision to the public debt charge number comes about because of the lower interest rates we saw throughout 2003 vis-à-vis what was estimated at the time of the 2003 budget.

In addition, there has been a compositional shift in our debt. As announced in the last budget, we are moving some of our longer-term instruments when they mature into shorter-term instruments, and as a result taking advantage of the lower interest rates that are on the shorter-term maturity. That is largely where the $1.4 billion comes from.

The Chair: Thank you very much to the officials from Finance Canada and FINTRAC and others. We'll adjourn now for a few minutes to allow the Canada Customs and Revenue Agency officials to come to the table.

Thank you very much.

À (1053)

À (1058)

The Chair: We can call the meeting to order.

This is, again, pursuant to Standing Order 81(5), Supplementary Estimates (B) for the fiscal year ending March 31, 2004, vote 1b under the Canada Customs and Revenue Agency.

We have with us today Mr. James Ralston, interim chief financial officer and assistant commissioner, finance and administration branch, Canada Customs and Revenue Agency, and Mr. Stephen O'Connor--good morning--deputy assistant commissioner, finance and administration branch, Canada Customs and Revenue Agency.

There are other officials available if we need them.

Perhaps you could just take us through the supplementary estimates via an overview, and then we'll have a round of questions and comments.

Mr. James Ralston (Interim Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Customs and Revenue Agency): Thank you, Mr. Chair.

The CCRA welcomes once again the opportunity to appear before this committee, this time in consideration of Supplementary Estimates (B) of 2003-04.

For the CCRA, Supplementary Estimates (B) comprise a number of separate adjustments to the agency's spending authorities totalling just over $41.5 million. The largest single adjustment is for the implementation of the 2003 federal budget and certain other government priorities. The $41.5 million represents a 1.1% increase in the authorities granted through the main estimates and supplementary estimates (A). With the inclusion of supplementary estimates (B), the agency's authorities will amount to $3.77 billion.

I and my colleague Mr. O'Connor will be most happy to respond to any questions. As you noted, we do have other officials whom you may wish to consult.

The Chair: We'll start with a 10-minute round.

Mr. Jaffer, are you ready to proceed?

Mr. Rahim Jaffer (Edmonton—Strathcona, CPC): I just wanted some further clarity. The first--funding to address legislative policy and operational initiatives--is pretty straightforward. But could you just explain further the spending on the procurement services, administration for Public Works and Government Services Canada? Could you expand on that? It wasn't too clear to me.

Á (1100)

Mr. Stephen O'Connor (Deputy Assistant Commissioner, Finance and Administration Branch, Canada Customs and Revenue Agency): Yes, certainly.

In our legislation, when the Canada Customs and Revenue Agency was established, responsibility for procurement was transferred from Public Works and Government Services Canada to the agency itself. We negotiated with PWGSC for our resource transfer to offset the shift in responsibilities. This $2.5 million transfer is simply that. It's a recognition of the fact that we are now undertaking the duties and responsibilities that were formerly undertaken by PWGSC.

Mr. Rahim Jaffer: The one just after that, the software to simulate border crossing models of infrastructure, does that have to do also with the operational ability for services, to access other security services? There was a question that some of our border crossings didn't have proper Internet services or things like that to access certain security files.

Is that what would be covered under this, or is it just an example of how the system would work?

Mr. Stephen O'Connor: It's basically a traffic modelling system to allow us to get a better estimation as to volume growth at our various border crossings. Yes, the work will be shared with our partners, but it's primarily an economic modelling system.

The ones we have now are fair to rudimentary. Once the model is finished, it will allow us to predict and forecast volume growth at each of the ports.

Mr. Rahim Jaffer: It monitors how much traffic flow there is in all the different ports?

Mr. Stephen O'Connor: It's mostly going to be a forecasting model as opposed to.... We have systems in place now to monitor traffic at our ports. This is basically a forecasting model. It will help us determine where the volume will be growing over the next four to five years, and then appropriate plans and actions can be put in place to--

Mr. Rahim Jaffer: To staff them or whatever.

Mr. Stephen O'Connor: Exactly right.

Mr. Rahim Jaffer: The final question that I wanted to just get a bit of explanation on was this implementation of the revised Canadian Environmental Assessment Act. Perhaps you could explain that, and how it's impacted as well. There was, I think, $51,000 listed here.

Mr. Stephen O'Connor: When the Environmental Protection Act came in, a number of departments got a limited amount of funding to implement the measures under that act. We received $51,000. We have certain real property holdings ourselves, primarily in the customs world. This was merely to allow us to honour our responsibilities and roles under that act.

Mr. Rahim Jaffer: I have one last question.

I know we're looking at these estimates heading into this year, but now with the change that's happening, how is that being implemented? Customs is moving out of revenue, is it not? How is that going to impact the budgets that are being estimated now? Are there going to be transfers to the new department?

Mr. Stephen O'Connor: For the current year, we've established what we green eyeshade people call a special purpose allotment. That is to say that within our appropriations the Treasury Board has established an allotment, which is the allotment for the new Canada Border Services Agency. It was to cover the period from December 12 through March 31, the end of this fiscal year. That's approximately $250 million for this year. We are in the process now of estimating the budget transfer that will be required for next fiscal year 2004-05.

Mr. Rahim Jaffer: Is that also going to be done for Canada Post because that is now under the purview of the revenue agency?

Mr. Stephen O'Connor: That's correct.

Mr. Rahim Jaffer: So that would be in the next set of estimates? That's fine.

The Chair: Thank you, Mr. Jaffer.

Mr. Paquette.

[Translation]

Mr. Pierre Paquette: Thank you, Mr. Chairman.

I want to come back to the fund for strategic and organizational legislative initiatives announced in the 2003 federal budget. Specifically, what is the purpose of this fund? The money is used to implement budgetary measures. What are the principal initiatives for which additional resources are being sought in the February 2003 budget?

Á (1105)

[English]

Mr. Stephen O'Connor: That's exactly correct. Each year in the months following the Minister of Finance's budget, the agency sits down and works out the cost of administration of the new budget measures. We engage then in a discussion with our colleagues at the Department of Finance as well as with our colleagues at the Treasury Board Secretariat. Then we make a request through the Treasury Board for the incremental funds necessary to implement the new budget. Subject to parliamentary approval, those funds are provided. That $21 million is an assortment of those budget measures.

[Translation]

Mr. Pierre Paquette: Are you talking about $21 million in total, or about $21 million over and above the amount already approved?

[English]

Mr. James Ralston: It is an increment to our budget. It's for a whole variety of individual measures that were announced in the budget and certain other priorities.

[Translation]

Mr. Pierre Paquette: On the subject of the textile and clothing industry, is the Market Access Initiative something new or has this measure been around for several years now?

[English]

Mr. Stephen O'Connor: This is with respect to the measures that were introduced with regard to lowering the tariffs on imports from least-developed countries. The agency received funding to enhance our level of enforcement and compliance activity to ensure the goods that were being imported from the least-developed countries truly originated in those least-developed countries. This was in a sense to protect our domestic industry to ensure fair trading practices. Our concern was that there might be incentives to transship through a least-developed country to take advantage of the tariff advantages. We've enhanced our enforcement activities to ensure full compliance with origin regulations.

[Translation]

Mr. Pierre Paquette: If I understand correctly, the funding is for customs. When a product is imported into Canada from another country, Bangladesh, for example, customs must take care to ensure the country of origin. It's not a question here of providing funds for aid measures, manpower retraining or conversion.

[English]

Exactly.

[Translation]

Mr. Pierre Paquette: I'd also like to know if the Special Youth Allowance and the Canada Child Tax Benefit are one and the same thing. What exactly is this allowance?

[English]

Mr. Stephen O'Connor: Under the children's tax benefit program, which is a statutory tax expenditure, the agency is authorized by Parliament to make expenditures to institutions such as the Children's Aid Society and the like where there are children under their care. Those children will get the same benefits that a child in a family relationship would receive. Because these institutions do not file individual taxes, this is an attempt to maintain a level playing field and not disadvantage children who are under government care.

[Translation]

Mr. Pierre Paquette: What type of institution are we talking about here? Shelters and foster families?

[English]

Mr. Stephen O'Connor: Yes, it's exactly that: foster families, the Children's Aid Society—anything like this.

The Chair: Thank you, Mr. Paquette.

Ms. Bakopanos.

Hon. Eleni Bakopanos (Ahuntsic, Lib.): Thank you, Mr. Chairman. Being new to this committee, I'm thankful to have the opportunity to discuss an issue I'm interested in.

Under Vote 1b, is the “funding to help Canadian apparel and textiles industries adjust to the implementation of the Market Access for Least Developed Countries initiative” for the transshipment problem?

Mr. Stephen O'Connor: That's correct.

Hon. Eleni Bakopanos: The amount is $2.6 million, and you are also seeking $386,000, if I'm not mistaken, from the Economic Development Agency of Canada.

Mr. Stephen O'Connor: I apologize. Where are we seeing those numbers?

Hon. Eleni Bakopanos: Those are the numbers provided on page 48, apparently, in the supplementary estimates.

Mr. Stephen O'Connor: I apologize. I just do not have that material in front of me. I'd like to do a follow-up.

Hon. Eleni Bakopanos: Okay. I was going to ask how the Economic Development Agency of Canada has anything to do with the transshipment problem and what the link is between the two.

Mr. Stephen O'Connor: If I can, Mr. Chair, I will follow up on that one.

The Chair: Please send it to the clerk and we will distribute it.

Hon. Eleni Bakopanos: Do we have any idea which least-developed countries would benefit from access to Canadian markets?

Mr. Stephen O'Connor: I believe it's 48 least-developed countries that—

Hon. Eleni Bakopanos: Was that in the announcement made by the government?

Á (1110)

Mr. Stephen O'Connor: Yes, it was made in the Minister of Finance's budget.

Hon. Eleni Bakopanos: Do we have any information from the amount we spent how much in fact of the transshipping problem we took care of last year? It's a new initiative in any case, from what I understand. There are always figures in the estimates for the same type of problem, but what I'm asking you is whether, since the initiative the government took a year ago, the increased funding has helped the situation.

Mr. Stephen O'Connor: The only increased funding we have at this moment is what's here in these estimates.

Hon. Eleni Bakopanos: Okay. So we have the same amount of resources to take care of a bigger problem. Is that what you're telling me?

Mr. Stephen O'Connor: Prior to these estimates we didn't have any funds for this, because of course this was a new initiative of the government.

Hon. Eleni Bakopanos: But there were problems in terms of shipping certain textiles—

Mr. Stephen O'Connor: I'm sorry; I understand your question now.

I do not have that information. I'm not sure any of my colleagues do. Again, if I may, I will get back to you on these numbers.

Hon. Eleni Bakopanos: I would like to have that information.

Thank you very much.

The Chair: Mr. Thibault.

Hon. Robert Thibault: Thank you. I want to come to the same thing. It's a question about the textile industry. Could you explain to me briefly what this transshipment thing is and what this funding goes for?

Mr. Stephen O'Connor: Yes, certainly. As I was saying, if we have import from a least-developed country, it will enter at a preferred tariff rate. Our concern, and of course the concern of our Canadian domestic industry, has been that this opens the door for manufacturers in non-least-developed countries to take an opportunity to transship through—as somebody said—Bangladesh and be able to access the preferred tariff rates. Our individuals here in our customs branch review state of origin, working with governmental officials in the least-developed countries to ensure that a commodity that was deemed to come from, we'll say Bangladesh again—

Hon. Robert Thibault: So this $2.6 million isn't done in any way as transfers to the industry; it's for additional administrative costs within your department.

Mr. Stephen O'Connor: That's exactly right.

Hon. Robert Thibault: And the program is to assist industry, without being handled through Industry Canada.

Mr. Stephen O'Connor: That's correct, yes.

Hon. Robert Thibault: What is not clear, and these are in notes that were done by the library, I guess, is that the Economic Development Agency of Canada for the Regions of Quebec was requesting $386,000, but it doesn't appear in your figures. Your figures only show the $2.6 million.

Mr. Stephen O'Connor: And that's for the administration of the enforcement and compliance.

Hon. Robert Thibault: There might be confusion with those other figures, with that other program.

The other question I had for you was the question of the design of a new occupational group. I don't have a clue what we're talking about here.

Mr. Stephen O'Connor: Let me just start with the occupational groups for a second. That's effectively how public servants are classified—the clerks, the administrative services officers, our program managers, and so on. The Canada Customs and Revenue Agency is a separate employer as a result of the legislative provisions in our act. Our classification structure is therefore one that's determined by the agency, with our board of management having to approve whatever structure is proposed. We undertook some work, in consultation with the Treasury Board Secretariat, reviewing that occupational structure within the agency.

Hon. Robert Thibault: So this is a classification of your—

Mr. Stephen O'Connor: That's exactly right. We were trying to see whether it could be simplified. The work that's undertaken here is just that—to have a look at it. We were looking at a hundred or so key jobs, reviewing their classifications, reviewing their job descriptions, and seeing whether streamlining and simplification would be possible.

Hon. Robert Thibault: So when we're talking here about $2.6 million to cover administrative costs related to design, this is for the design itself; it's not for the additional salaries.

Mr. Stephen O'Connor: That's exactly right. There were some contractors, some other outside individuals, brought in and some internal people.

Hon. Robert Thibault: Thank you.

The Chair: Thank you, Mr. Thibault. Is there anybody else?

Mr. McKay.

Hon. John McKay (Scarborough East, Lib.): It strikes me as quite curious that you have to pay out $2.5 million to redesign occupational groups. It flies in the face of common sense. Why do you have to spend $2.5 million to figure out whether a bunch of people working for the government should go over here or over there, or have a higher or lower salary, as the case may be, or up-or-down benefits?

Á (1115)

Mr. Stephen O'Connor: The study was really in effect trying to see whether we could reduce the number of job classifications and categories we have, to go for simplification. There was a lot of work trying to establish job standards, seeing whether we could collapse levels together.

We knew everything was going to have to be documented and justified in front of the Public Service Staff Relations Board and the like, so there was a lot of effort put into ensuring the documentation and substantiation, and that there was a just cause for any changes we were going to be proposing.

Hon. John McKay: Things do work differently in government, don't they, Mr. Chair?

Mr. Stephen O'Connor: I certainly can provide you a more detailed costing of that, if you would like to see it.

Hon. John McKay: No, that's fine. Thanks very much.

The Chair: Thank you very much, Mr. Ralston and Mr. O'Connor.

Before everyone goes, I'm not going to go in camera, but I wanted to report back.

Your subcommittee on agenda and procedure met on Tuesday and worked out a game plan from now until basically the end of March, given the number of sitting days.

We have two bills we have to review. We have Diane Ablonczy's private member's bill on a chief actuary; we have the government bill on the customs tariff to deal with; and we have the main estimates to deal with. Essentially that takes us through to the end of March.

That's what we decided upon, with your approval. We'll circulate those notes. Beyond that, there may be some other work we could undertake, but we've left it at that for the time being.

Mr. Jaffer.

Mr. Rahim Jaffer: I have a question. If, for instance, through this process as we go through the estimates, and then here when we're faced with them, if we wanted to vote on these—wanted to vote against them, or something—is there a certain procedure in the committee for how that works?

The Chair: Yes, there is. We'd need a quorum for it, but yes, the committee has the ability to do that.

Mr. Rahim Jaffer: The quorum, I guess, is 10 members. I guess what you're saying is right now we couldn't vote, if I wanted to vote against these. I think it's more for voicing my opinion on the committee.

The Chair: I'd like to thank the members for really focusing on the estimates. There's work that can be done. At the Standing Committee on Government Operations and Estimates, when we dealt with Mr. Radwanski and a couple of other agencies, the committee actually took some very decisive action on the estimates.

So we have the power and the ability to do it. That's why I think it's very useful to focus on estimates. I'm glad everyone stayed focused on the estimates and not some of the other stuff that sometimes we get involved with in a review of this sort. I thank you all for that.

The meeting is adjourned.