:
Thank you, Mr. Chair and committee members, for the opportunity to appear before you today.
[English]
I applaud all members of the House of Commons Standing Committee on Government Operations and Estimates for undertaking a study on the state of Canada's estimates and supply process.
Let me assure you that you'll have the full support of the Office of the Parliamentary Budget Officer in this important work. The time is right for substantive change. The context for change is both institutional and fiscal.
[Translation]
From an institutional vantage point, I agree with Senator Murray who recently described the estimates and supply process as an “empty ritual”.
From a fiscal vantage point, as you know, it is anticipated that the government's 2012 budget plan will call for significant and sustained spending restraint. This is an important time to better engage the watchful eye of the legislature to ensure that spending restraint implementation is carried out by the government and public service in a way that effectively manages fiscal and service-related challenges.
One of the key principles underlying responsible parliamentary government is that the House of Commons holds the “power of the purse”. The House must be able to satisfy itself, as the confidence chamber, that all spending and taxation is consistent with legislation, Parliament's intentions, and the principles of parliamentary control. When this is accomplished, Parliament is serving Canadians.
[English]
In my view, this is rarely accomplished. Parliament is at best only giving perfunctory attention to spending. Are members comfortable to vote on some $104 billion in annual discretionary expenditures, examining $267 billion in total program spending, with about 90 hours of collective effort among parliamentarians and with some departments and agencies seeing no scrutiny whatsoever, as was the case in 2010-11?
Too often, almost as a matter of convention, Parliament is starved of the information necessary to perform its fiduciary responsibilities. How often does Parliament see real decision-supporting financial analysis prepared by public servants on new legislation or procurement? The answer is almost never. Is it possible to hold the government to account without access to decision-supporting financial analysis?
As the Parliamentary Budget Officer, I was very disappointed, as I am sure many of you were, to learn that departments and agencies have been instructed by the Treasury Board Secretariat not to provide Parliament with information on the government's spending and operating review in the upcoming departmental reports on plans and priorities. This is a 180-degree change in direction from last November. It is a significant development. It undermines Parliament. How can Parliament provide spending authority without details by departments and agencies? Should Parliament ever vote on supply without financial information and analysis?
The time has likely come to ask whether we've designed an estimates and supply process to serve the power-of-the-purse role of the House of Commons, or whether we have allowed it to be reworked over many years so that it primarily serves only the government. What have we done? Have we created a system so complex—with different accounting between budget and estimates, a mixture of information on program activities and outcomes, and a voting system based on inputs like operating and capital—that only a handful of people really know how the whole system hangs together?
Is it not time to say that so much of the information we put in our estimates books represents simulated transparency at best—transparency whose purpose is to obfuscate and confuse, not to support accountability? Have we created a system where the budget is so disconnected with the estimates that officials from the Treasury Board Secretariat, my old department, think it is normal to inform members of Parliament that they will not see the details of the 2012 budget in the 2012 reports on plans and priorities.
[Translation]
Do we want the House of Commons to have the “power of the purse”? If we did, and we thought it was truly important to be respectful to our Westminster roots, our Constitution, and the Financial Administration Act, we would build accountability and the estimates and supply process around this principle.
What happens when we repeat things like the power of the purse belongs to the House of Commons but we behave in a totally different way? Could it be that our respect for our institution is diminished?
Public servants like me are asked to be caretakers of these institutions—their underlying principles and values. We get paid by taxpayers to do this. We do not have the necessary tools to do it well.
[English]
William Ewart Gladstone, a former Chancellor of the Exchequer, a four-time Prime Minister of the United Kingdom, said in 1891:
If the House of Commons by any possibility loses the power of the control of the grants of public money, depend upon it, your very liberty will be worth very little in comparison.
When it comes to principles that underpin institutions, if it was important 100 years ago, it is just as important today. The stakes are high.
I think the system needs to be examined on three levels: process, structure, and support. On process and support, we need to ask ourselves why parliamentarians are not incentivized to scrutinize departmental spending before they give their consent. Why?
Are committees even required to review the estimates? The answer is no, thanks to a long-standing order famously known as the deemed rule. Could there be a more symbolic and symptomatic testament than the deemed rule to the state of dysfunction and disuse of the estimates and supply process?
Is it not a problem that there is no regular review process for the more than $100 billion of tax expenditure programs, which are very much like other spending programs, but also carried forward each year with scant attention?
Are committees tasked with reviewing estimates able to dissent? The answer again is no. They're unable to increase spending. Minority reports or reductions of estimates are rare.
Are committees encouraged to make substantive recommendations? According to a 1979 ruling by the Speaker of the House of Commons, the estimates and supply process was not the time. When is the time?
Do committees have specialized support to review the estimates? Yes, but the extent of the resources available to you and your colleagues would not likely fill most of the chairs around this table. Surely the time has come to design a process that incents scrutiny before consent and provides members of Parliament with the tools and capacity to recommend improvements in how we spend taxpayer money.
[Translation]
On structure, it makes little sense in a 21st century world for parliamentarians to be voting on inputs like operations and capital, and grants and contributions that cut across a department spending many billions of dollars for a diverse set of program activities. Given the recent experiences with border infrastructure funds and aboriginal housing and education, would it not make more sense to consider program activities (five, 10 or 15 per department) or their associated outputs as more relevant control gates? Why should ministers and their accountability officers be able to move monies from one activity to another without scrutiny or consent? Would voting on program activities not encourage more meaningful scrutiny on service level impacts as we move forward with spending restraint? Would this not help simplify our estimates system, which collects financial and non-financial performance data on program activities?
[English]
Clearly, any changes to our estimates and supply process need to be home-based and homegrown, but can we learn from other responsible parliamentary government systems? I think we can, and I encourage this committee to explore lessons learned in other countries. Sweden, for example, includes performance frameworks for proposed programs in its budget. Committees debate these performance frameworks. New Zealand has a proactive disclosure of decision-supported financial analysis in memorandums to cabinet and votes supply on a program activity basis, as does South Africa. There are academic scholars, such as Professor Joachim Wehner at the London School of Economics and Professor Allen Schick at the University of Maryland, who have travelled the world and studied different budget and appropriation systems and could be of great service to members of this committee, if there was interest.
Finally, I close with the repeat of yet another question. Do you want the power-of-the-purse role to rest with the House of Commons? If so, there is work to do. As George Bernard Shaw said, “Progress is impossible without change...”.
Thank you very much. I would be honoured to address your questions. Merci beaucoup.
I want to thank our guests for coming today.
I was looking forward to the report from the budget officer. As you know, I've been active in the file on estimates since basically I got here.
I do know why they called you, in this magazine Power and Influence, a media star, because most of your previous comments were comments, and I was looking for suggestions in terms of what we could do better.
Now, I know that your office put together a system that's available to all members of Parliament in terms of looking at actual spending. Part of my issue here is that we have mains and budgets coming at the same time. A year goes by, and at the end of the fiscal year, six months later, you get the actuals to do the actual comparison.
So the approach that you've developed for members of Parliament to use is that we can look at actuals as they go, as they're reported. What I'm looking for today are what suggestions you have for improvements. Have you looked at anything specific? One item is the tool you've added for members of Parliament to better scrutinize the actual spending that will happen.
You talked about “deemed”. Do you recommend that we get rid of deemed, and how do you recommend doing it? Do you think each committee should do it? Should there be a special committee on estimates only, as we have here, just to look at everybody's estimates?
You allude to what's happening in other states—for example, Australia. You brought it to my attention that they have more of a programmed approach. Do you have actual solutions that you're recommending to this committee to look at? That's why we're having this study. We're having experts like you, who have looked at these issues, to give us suggestions to make improvements.
I do agree with you that it's important for Parliament to be able to scrutinize these things, the actual spending of the $259 billion, in a more appropriate way. I may not agree with some of the things you've said about what the role of the government is, or the opposition, but this is for us to have a better understanding, when we stand up and vote for it, of what we're voting for.
Based on that, do you have any suggestions for us?
I think probably the most important suggestion I could make, that I think would both incentivize parliamentarians to scrutinize and make the work they do have more meaning, would be to change the control gate: move it away from voting on inputs, operating capital, and grants and contributions to a program activity basis.
I can't imagine what it would be like to be a new parliamentarian and get estimates books and public accounts books and budget books thrown in front of you and be asked to vote on an operation that cuts across a whole department when we have departments that spend billions of dollars. I know, having worked on seven different departments—three central agencies, four line departments—that when people talk about, say, the coast guard....
I worked at Fisheries and Oceans. They get the coast guard. They should vote on the coast guard. They should vote on search and rescue, on icebreaking. Those are real to people on both coasts.
I worked at Agriculture Canada. Farm financial programs—those are real to people. They should vote on farm financial programs.
I worked at HRSDC. They should have separate votes on the grants and contributions in that program, whether it's for training or the elderly or whatever.
So the number one recommendation, sir, is to change the control gate. Make it a program activity-based system, just the way it exists in Australia, New Zealand, South Africa, and other countries.
I think it would incentivize people. People would understand it. And then when people are looking at how to monitor whether or not they're doing restraint well, they could look at these activities—these are the control gates—and look at performance relative to those control gates. I think it would just reduce the complexity tremendously.
On process, the “deemed” rule to me is just a symptom of failure. It's like people have thrown up their hands and said, “We can't do this. It's useless. Why am I wasting my time?”
To that, in part I think we have to understand...and I don't even know; I need help to understand why people feel that way. We don't feel that way when we do research here; we released a paper yesterday to parliamentarians and Canadians on a costing of Bill .
We need to look at the process and try to incent people more. I think if they could have an impact, if people sitting on a standing committee, when they bring in a deputy or a minister, could say, “You know, we've looked at this program activity, and this seems like a weak program activity. We know we can improve performance”—and I know you're the type of member who likes to ask those kinds of questions—“so I want to come back and see you next year; I want this improved.”
I think we should have reports coming out of every standing committee around those program activities to try to improve them. The deemed rule should just go. I don't think it's even part of the conversation. To me, it's just a symptom of failure.
On support, you have to ask yourself, do you have access to the people and the resources you need? But again, I don't think it means creating a parallel process around Parliament. The public service has to support everybody around Parliament in a different way.
For instance, yesterday we found ourselves providing a financial analysis, a 90-page paper, peer-reviewed by seven people, on one aspect of Bill . Why can't the public service do that? We had two people working on it. Why can't the public service...? Before, when we used to do that work.... You should get access to that.
In terms of standing committees reviewing the reports, I think these reports on plans and priorities and departmental performances are weak. They're communication vehicles. Nobody uses them. I worked in all three central agencies. They don't go to cabinet.
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I think if we're going to change, to some degree the change will have to come from members of Parliament. I think members of Parliament have to decide what they want when they vote, how they want to vote, and the type of information they want.
I think if it isn't demanded by folks like yourself, you're not going to receive it. There won't be a supply. You'll have to instruct public servants to make this change. I think there is a case, and it probably shouldn't be surprising—and this is certainly not a partisan comment—that we probably design the system to support the government of the day or to support, to some degree, even the public servants of the day. Nobody likes coming to this committee.
Voices: Oh, oh!
Mr. Kevin Page: Well, I do.
Nobody really wants to say, okay, decision support information, where the F-35, a crime bill.... I'm not picking on the Conservative side, because I'm sure you can go back a few years and talk about other issues of the day. Here's our decision support analysis. Here's the analysis that we used to make this decision, and here's what we're trying to achieve with it.
Unless members around this table and in the House of Commons say what they want, they will never get it. Obviously, the way power will work is it will work to make sure that we control.
There's a great expression I heard from a German colleague recently. He said, “Kevin, trust is good, but control is better.”
Trust is good, and the only way you get trust is by sharing information and having open debates. But if you can control it, you don't even need trust. You don't need to share information. Public servants like myself, who have operated the system for three decades, have manufactured a system so that you never get to see what you really need to see to do your job.
What we tried to do at PBO, and why people actually even came to this organization, was to show you what it might look like. What we released yesterday—and no offence—was actually decision support information after the fact. People behind the scenes get that all the time. This is what's rare. The kinds of projections Dr. Askari does and all the analysis around them...everybody behind the scenes, cabinet ministers, gets that. You don't get that unless you get it from Dr. Askari.
PBO is a bit different that way. We're showing the art of the possible. I know there's friction. I can feel the friction in this room, like the “media star” comments or whatever. There is friction. But it isn't friction. We're just trying to give you stuff that we were giving cabinet ministers in the past. That's the reason why we came. No one's getting rich here.
Thank you, Mr. Page.
I just want to read a quote before I start:
It is by the application of the power of the purse that we have moved forward, slowly and prosaically, no doubt, but without any violent overturning, and have grown from being a small island in the Northern seas to be the centre of a world-wide Empire.
That was said 100 years ago by Winston Churchill in the Liberties of Britain, so I don't think this is a new question.
I have had an opportunity, quite frankly, to run 10 businesses—manage them, own them, have a $20 million portfolio. Financial statements are the only way I could run those businesses. I had hundreds of employees.
I am overwhelmed here. I am under budget, trying to run a $300,000 budget with a constituency like Fort McMurray—Athabasca, where I have huge immigration problems, a tremendous number of issues, and I have to run it all on that basis—all the employees, etc.
It's almost impossible. What you're suggesting along with that, or at least some of the practical suggestions, I just find overwhelming, and I don't know how it can be done with the current economic climate, and certainly not with the budget and what's happening in the world.
I would like to ask you a couple of questions regarding that, though, and I think there are some good suggestions—one in relation to the way we vote—and I think the Auditor General, in essence in a 2003 report, felt that the key to effective review is knowledge of the institution. I don't disagree with you there.
I was wondering about your own department in relation to what you do yourself. I know that recently you've developed computer software. Do you know which computer software system I'm speaking of? What's it called?
I think what the situation is here—and the situation was 100 years ago in our parliamentary tradition—is that we have to trust our bureaucrats. I don't disagree with you that we can make improvements upon the system, but I think ultimately we have to trust the people behind us and the people you represent and you yourself. We have to look for that input.
My position is this. There's no physical way that 308 members of Parliament who are tasked with $300,000 of budgetary money to analyze these documents can do so effectively, and, frankly, in my mind it would be ineffective to try to do so, unless you're going to times by 10 their budgets. That was my main issue in relation to that.
Mr. Kevin Page: Was that a question?
Mr. Brian Jean: No, it was simply rhetoric.
My other question is on the deemed issue. What would you suggest instead of having them deemed? We all know, based on tradition, why they were deemed, because we don't want more elections, and quite frankly, government has to continue to be run. What other solution would you suggest?
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When we try to describe in our reports what's available to parliamentarians in the way of information, we try to ask for things already collected in the ordinary course of business. The idea is not to impose a new activity burden or a new cost burden on the government. We can show you all of the fiscal exercises undertaken by the government and the collective information.
Without creating a new cost burden, even from an analytical point of view on your side, if the information can be provided in a manner that looks at inputs, outputs, and outcomes at a program activity level without adding a big infrastructure, it'll likely be more meaningful. We've talked about synchronizing the budget and appropriation bills to make them more accessible to parliamentarians.
Some of the improvements could be quite significant without imposing burdens on legislative staff. We hope that the information is there, that the resource is there, and that we're seeing a glimpse of it through the government's quarterly financial report. You're starting to get more information from departments on a quarterly basis, which enables understanding. So there's a potential to build on that without creating an additional burden. We've spoken to CFOs and they tell us they're collecting that anyway. They're using their internal processes. It's not a huge cost burden to provide this to parliamentarians, and it will make stuff more understandable.
If you're looking at the coast guard, as Mr. Page said, on a program activity basis, it's not about operating vote, capital vote, accrual accounting or cash accounting—it's about saving lives, sovereignty patrols, and those kinds of things. Then you could have a better appreciation for the resources going in, the inputs, the activities they're undertaking, and the results they're getting.
:
Thank you very much, Mr. Chair. I would like to join my colleagues in welcoming you here today.
I just want to follow up on the comments made by the previous questioner. Just for the record, it's important for us to be clear that this was not the minister who gave the directive to not provide Parliament with information, as is being inferred by the members opposite. You referred to that in your opening comments, but I think they're misrepresenting them.
I do think, though, that your earlier point has been well made, that this system has been in place for a very long time, and perhaps that's why from time to time you have a committee like this one. After they've wrestled with understanding everything involved in the whole estimates process...we need to do a study to try to figure out what is keeping us from being able to do our job well and what needs to change.
I want to refer to a comment that was referred to by my colleague, just in terms of the Auditor General. In 2003 she stated that to facilitate the estimates review it was more productive to concentrate on a particular program or an organization of a relatively small size. In your opening comments, you referred to having some focus on perhaps 5, 10, 15 activities within a department. My question is, if we do that, would not other program activities receive less attention or not be paid any attention to, and how would you see us balancing that?
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The government organizes information already on a program activity basis, so this information already exists, and this information is provided in a parallel fashion in the way you vote this supply process. It's actually not a new thing.
We're ready to launch this. We've been working on this for some period of time. I was at the Treasury Board Secretariat when we launched this exercise, and we did it because we wanted to have more transparency. We wanted to give government an opportunity to do strategic review, not on a high level basis but on a gritty basis.
If you organize that information differently and you change the control gate—you could argue it could be used in a proper way, not just by members of cabinet but also by deputy ministers in some sense too—and if you don't go to a U.S.-style system where you're dealing with appropriation bills that are this big, so something like 10 or 15 per department, I think it would incentivize people. I think people would just understand it more than voting on a grant and contribution for $8 billion that exists, say, in Aboriginal and Northern Affairs Canada. If you were voting on aboriginal education, or water, or health issues, or economic development, you would understand that. It would make more sense for people in the ridings, and I don't think it would be overwhelming.
It already exists now. We provide this information, but you just don't vote on it.
You could move that system. Could you actually launch it with one or two departments to test it out? That was the context in which the Auditor General talked about financial reform. Could you try that? It's possible, and if you're interested in doing it, tell us to do it. Tell the bureaucrats to do this and we will do it for you. We could work collaboratively. I'm saying that perhaps not just as the Parliamentary Budget Officer, but as someone who has worked in all these central agencies. We are actually here to work for you. It may not always seem that way, but we are here to do that for you, and if that's what you want, we can do that.
Thank you for coming in today.
We are trying, in the spirit of bipartisanship, or tripartisanship, to solve a problem that's been around for a long time. We had officials from Treasury Board show us copies of main estimates from the 1880s, and they don't look a whole lot different from what we see today. I brought a copy of the 2012-13 main estimates, which probably doesn't bear any real resemblance to what will really get spent, because there's a budget coming up that will change what the actual expenditures will be.
We've talked about timing with respect to the budget vis-à-vis the estimates. I'm intrigued by what you said about Australia and New Zealand, with regard to coming up with a budget and estimates at the same time. As someone with a business background, I can tell you that this is how you would try to run a business.
Is there a problem with budget secrecy? It's a long-standing tradition that we don't divulge the budget ahead of time, so that no one gains from it, economically or otherwise. Is there a problem in Canada? I know New Zealand is a much smaller country, and perhaps they're able to keep the more detailed planning process of estimates more confined. What barriers would there be in Canada to doing that, having budgets and estimates coming at the same time?
Maybe you could tell us whether this is something we could do, as opposed to having a fall budget or a time lag between a budget and main estimates.