Welcome, Minister.
We have with us today Minister Day, and we will be reviewing supplementary estimates (C). Everybody knows that supplementary estimates (C) will pass tomorrow and that our deadline has passed, but we had to do this as a formality. Therefore, there will be leeway on the questioning.
We are also doing the main estimates. We had discussed, as a committee, that the main estimates will be discussed further when the RPP is out. So, Minister, we hope we can call you back then.
With that, Minister, I understand you have a few minutes of opening remarks. I'll give you the floor.
:
Thank you very much, Madam Chair.
Friends and colleagues, it is an honour for me to be here today to discuss the expenditures of the Government of Canada.
[English]
I will just make a few opening remarks. I'm looking forward to your questions and your insights, and I'm sure your positive criticisms and guidance, as we move ahead.
One of the things that's interesting about responses to the budget, and I say this with some self-admission here, having also served in opposition, is that right after the budget comes out, many times--and I'm sure present audience excluded--the response from the opposition, and again I'm talking from painful experience, having been there, is that there is nothing in this budget. I just want to assure members...as you know, there is about $280 billion in this budget. Now there may be disagreement on how it gets spent and is dispensed, and I accept that, but I do think it's important to let Canadians know there is a lot of money in this budget. Some people may like that thought, some may not.
When it gets drilled down on the critics' side, someone will say, for instance, that there is nothing in the budget for seniors. There is actually $36 billion in the budget for seniors. People say there is nothing for agriculture. Just for the Department of Agriculture alone there is $2.9 billion.
So I think we can have agreement. Certainly there is a partisan nature to what we do, but I hope we all agree that there is a lot of taxpayers' hard-earned money that goes to running this government day to day, which is about $34 million a day just to keep the basic operations going.
I'd like to reflect on the fact that we hear concerns about a deficit, and quite rightly. This budget, as we indicated before it came out, was going to have the initial steps of a road map to get us back to a balanced budget. Just over two years ago, recognizing that we were moving into what has been seen largely as the worst global downturn probably since 1929, we said, “We're going to take on some deficit; we're going to intentionally, temporarily, go into debt so that we can provide some stimulus to the economy in this down time and in this downturn.” I'm sure there will always be debates on whether there was enough or whether it was too much, but this was an intentional move. We knew we would be moving into a deficit situation. We also said that at the end of this year that deficit spending will stop.
We now have a deficit, as you know from the figures, of about $53 billion. That means we're borrowing about $53 billion to complete all the spending to keep things moving day to day in government. And we have said we're going to get to a basically balanced position--almost all of that $53 billion taken care of--by the year 2014-15. People have said that's a gigantic and improbable--and some are saying impossible--task. It's a matter of how you break it down, and that's what this year's budget is about. First of all, we've sent the indicators, but you've seen many areas of increase in this particular budget. In the years following this budget, of course, the actual increase in spending itself is going to come to an end. We have debt charges that will continue to go up for a while.
With this budget and the numbers that are before you, people are quite rightly asking, how do you get rid of that $53 billion? Actually, we're trying to break it down into three large bite-sized pieces. The stimulus spending, which includes infrastructure, is about $19 billion. That's over at the end of this year.
If this glass of water represents let's say $50 billion plus.... Any time I round off a billion, please don't think I don't think a billion dollars isn't a lot of money. It's a pile of money. But for rounding purposes, if you look at this glass of water as representing about $50 billion plus worth of deficit, once we take out $19 billion, which will end this year, that part of the deficit right away in one year is going to shrink by about 40%. So for the purpose of illustration--and Paul is catching on--the deficit is going to go down about 40% just in one year along that pathway.
We also said we're going to put a lid on departmental spending. Departments spend about $54 billion, all added together, to run their operations. We've said there's going to be a lid on that $54 billion. The 2010-11 lid you have in front of you will continue for the next two years. Just doing that stops the increase we've been seeing in our budgets, which we take full responsibility for. Just by doing that, by the time we get to 2014-15, that's about a 37% reduction, which takes us down to about there.
The final portion of what we are going to be embarking on, and what we've been embarking on over the last three years, is strategic reviews of every department and agency. About a third of those come before the government each year. We say to the department heads that we want them to take responsibility for this, and we want them to find approximately 5% of their overall budget that they would classify as low priority, things that if they didn't get done...and we'd like to get it all done. We don't want people programs hurt, and we're not going to reduce the transfer payments to provinces. We're not going there, but we want them to help us find 5% in each department and agency. That, combined with what we think will be some upward movement on income revenues to the government, which basically means taxes without raising taxes, is the remaining approximately 23% or so. It will not be as easy as drinking a glass of water, but I wanted to show you the three main approaches we're taking to get there.
I know there has been some speculation as to whether we are being overly optimistic on the revenue side. In other words, are we really going to see an increase in economic activity that can help make up that remaining 23% to get rid of the deficit? I believe we will, obviously. We're already hearing from around the world signals about how this government has been handling its economic matters. The manager of the largest bond portfolio fund in the world out of the United States, Pacific Investment Management, a trillion dollar fund—a trillion takes a long time for my brain to compute—said not long ago that he's directing major institutional investors to Canada. A week ago, in a financial report, Russia said they want to strengthen their currency reserves by buying Canadian dollars. So already we're getting signals that internationally we're becoming more and more attractive on the investment side. Of course, when people invest in businesses here in Canada, that means more jobs, more people working, and more taxes without raising taxes.
The chair is giving me a signal. I will happily conclude my overview, and I'll look to you for your questions, direction, and insight.
Thank you.
I appreciate the minister coming here today. As the chair indicated earlier, this is the first step towards reviewing the main estimates as well as finalizing the supplementary estimates (C) review. We appreciate your taking the time to come here today.
Listening to your analogy of the glass of water, I thought of the Parliamentary Budget Officer when you were saying that. He's still thirsty, thinking there's a structural deficit and that we're going to have some time to work our way through that. I also note that you talked about taxes without actually raising taxes. I find that an interesting turn of phrase, especially having been a business person. We do see some tax increases throughout this budget.
I turn first to something this committee has actually studied, and this is concerning the departmental budget freeze. The main estimates show that this year the PCO will get just over $13 million over last year's budget, and that's for the Prime Minister and portfolio ministers' support and advice. I heard you in the House stating that this increase was for the upcoming G-8 and G-20 meetings. You used that as probably the foundation for having that increase. We do know that the G-8 and G-20 meetings will be over by this summer.
My question is very simple. It's a simple and direct question, and I'd like a succinct and direct response, if you can, knowing that I have only a few minutes. Will the PCO departmental budget be frozen at the 2009-10 level or at the inflated 2010-11 amount?
:
Thank you for your request for being succinct. I will try to be. I'm just jotting this down here.
All budgets are going to be frozen at the 2010 levels. As I'm sure you're aware, that includes all spending. From year to year, PCO has any number of issues that they deal with. As I'm sure you're aware, it's not just the Prime Minister's Office; there are also four other departmental offices, or portions thereof, that get funded, and situations can cause that funding to increase. You already mentioned a couple of those: the G-8 and the G-20. One of the particular ministerial assists to the Prime Minister has significant travel implications related to his abilities, and that quite rightly requires some extra attention. There have been a number of issues that the PMO has had to engage Canadians on that required extra attention, extra dollars, extra resources.
When we say we're looking at a departmental freeze, keep in mind that if there are extraordinary situations that come along, that could result in a request for an increase. Basically we're saying it's frozen, but there could be extraordinary situations that would require an increase.
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That is fine, Mr. Minister.
I have another question. In supplementary estimates (C), we can see that there is a decrease in the amounts to be paid out by the guaranteed income supplement on the basis of the projected number of beneficiaries and the average monthly rate.
This means that $228 million will not be paid in guaranteed income supplement benefits and will be returned to the Canadian treasury.
However, on May 27, 2009, the opposition parties supported a statement made by the Bloc Québécois that said that the situation of tens of thousands of seniors left in the lurch due to defects in the guaranteed income supplement was entirely unacceptable. The parties said that the guaranteed income supplement program had to be changed, that it had to include a full retroactivity for the amounts due to the beneficiaries, that there should be a $110 increase in the GIS monthly benefits, and also that persons aged 65 and over who are entitled should be given supplementary benefits for more than six months.
Given that there is a $228 million surplus, do you intend to implement this motion which was adopted in the House of Commons by all the parties except yours, of course, on May 27, 2009?
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As we said, our priority is to eventually have a balanced budget. However, we will do this by respecting the programs available to citizens all over Canada. We will do it without reducing transfers to the provinces for health and education.
It is very important to continue without reducing the programs meant for the people. Moreover, this must absolutely be done without increasing taxes. Also, it is important to send this message out not only here in Canada, but all over the world. Here, in Canada, we will reduce not only the deficit but the debt as well.
Regarding our debts and our economy, the ratio is 31%. We can look at the situation in other countries. I believe in England, the ratio is 66%. In Japan, it is over 100%. I believe that it is 115%. When there are investments and when businessmen and women see an increase in the debt, they understand that it will be impossible to maintain a reasonable tax system.
In the countries that have a higher debt level, they understand that this will create great difficulties for the economy. This is why many world organizations continue saying that Canada's economic situation is not as risky as that of other countries. This is very important for us, especially in order to see investments continue, domestically and from international sources.
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Madam Chair, security costs are always an issue at international events. They certainly were at the Olympics. Costs are very high when these events are hosted, either here or around the world. I understand projected costs for the summer Olympics in the U.K., for instance, are already somewhat north of €2 billion and probably going up. We believe the federal government has a responsibility in the sharing of those costs. We certainly took that responsibility seriously with the Olympics.
The last time there was a meeting here in Ottawa, for instance, with President Bush, the President of Mexico, and the Prime Minister, there were considerable costs to the City of Ottawa, and the federal government shared the responsibility there. So on the specifics, I'd have to say to my colleague that I'll leave it to our public safety minister to decide what the best approach to that is, some kind of a bond issue or how it's done.
The goal is going to be that there are no damages, and to have security in place so that would be the final result. That's always the goal. It's unfortunate in a society like Canada's, which is very open, where we encourage robust demonstration and robust public displays of either support or lack of support for any particular issue, that there always are people who abuse that and move to violent levels. That's always disappointing. I think whatever cause they're promoting, once they move into the area of violence, they lose sympathy they might have had. Members may have seen and noticed that on the first Saturday of the Olympics in Vancouver, there was a group who masked their faces and were particularly intimidating and violent. It was actually the crowd itself, many of whom were protesters, who pushed back against that.
Chair, it's good to have the minister here.
I just wanted to talk a bit about.... I was intrigued with his water analogy. I note he has a Kindle there, and I thought he might make use of higher technology than glasses.
If I may, I'm seeing that this is the budget for the PMO and PCO, and I note that they're going to get this much more. My question is, are they going to remain with that much for the next number of years, or are they going to be getting less so that they'll be like the rest of us in the bureaucracy who are going to have cuts?
The question is, will those increases to the PMO remain within this budget parameter you have set here? Yes or no.
:
Thank you, Madam Chair, and thank you, Minister, for being here.
I hate to do this to you, but I'm not going to let you off the hook. Two of my colleagues have tried this, and I'm going to continue down the same path, because with all respect, we are very concerned--I think you can tell--about the potential padding of certain budgets here before a freeze, so that there's benefit after the freeze.
In the PCO, we have an increase of $13.4 million, to $74.5 million. I prefer to work with numbers. I understand you said the freeze would be net of any extraordinary expenses, but I really want to nail this down because that could include any amount of a certain amount of water in a glass. You have specifically referred to three items as being part of that increase. One is $6.4 million for what you have referred to as “chronic underfunding”. I'd love to know, given the increases in past budgets, what could have been chronically underfunded, but I'll save that for another time. That would leave $8.7 million for the G-8, the G-20...and as you have also referred to the winding down of offices for the Olympics, I think Canadians would love to know why it costs even more to wind something down, but, again, that's more detail than the time I have.
So $8.7 million for two things that are very clearly extraordinary items. Can I get a commitment...? Even if the $6.4 million for the underfunding were kept, that would mean that the budget for the PCO in 2011-12 would be frozen, in fact, at $65.8 million. Can you confirm, then, that the budget for PCO--absent of potential future requests, as you've highlighted--for 2011-12 will then be frozen, and not at $74.5 million, but in fact at $65.8 million?
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Let me talk about the broad brush increases that we have seen. And then on the minutiae, of course, if there are specific questions, Madam Chair, we can look at it on a department-by-department basis.
But when you consider the increase in the size of the public service itself, it's very significant. You can look at it either over 10 years or year to year. In terms of the public service, there has been a 27% increase in individuals from 1999 to 2009, and a big portion of that was from the time we formed government in 2006. That's a pretty hefty increase. In terms of core public administration, the increase has been over 34%. And this year you have seen a significant increase in the number of public servants over last year.
Two of the main drivers there...we did indicate that we would have the funding in place for an increase in the number of RCMP across the country, and part of that increase is reflected in this year's budget.
We also said we would make sure our armed forces would have an increase in their regular members, up from 63,000 in 2005 to where I think we're at 68,000 plus a few right now.
So in the broad area alone of more public servants, there has been an increase--
:
Thank you very much, Madam Chair.
Good afternoon, Minister. I know that you are the president of the Treasury Board and that you are thus not responsible for all government workers. Government agencies and crown corporations come under other budget envelopes, but the fact remains that there are approximately 450,000 government workers in this country, and you are responsible for a very large proportion of them.
Earlier, you referred to the 13,000 public servants who leave their jobs for all kinds of reasons. One of our fears is that, given the public service spending freeze announced in the budget, the federal government will, in one way or another, eliminate positions.
Can you confirm to us today that no public service positions will be eliminated and that, given that it will be difficult to find people to replace them, the natural attrition of employees is not a solution either?
:
The major changes in the Treasury Board Secretariat operating expenditures for the supplementary estimates are largely transfers from other departments to support the national employment equity councils and the national managers' community--that's $144,000--and $856,000 to support the financial interoperability and stewardship initiative for financial information systems.
There is also an increase in vote 10 of $875,000 to support the workplace development innovation fund--that's in a central vote--to support deputy ministers to develop leaders in their organizations.
In vote 15 there's a compensation adjustment of $196.4 million, which then gets redistributed to appropriations of departments and agencies. The list of the organizations to which those appropriations are distributed is included in the supplementary estimates. These appropriations are to cover compensation decisions made and agreements signed between August 1, 2009, and December 11, 2009.
There is an increase in vote 30 for pay list requirements of $100 million to supplement other appropriations of departments and agencies for requirements related to parental and maternity allowances, cessation of service, or other employment adjustments. I believe those items were referred to by Madame Bourgeois when she was talking about vote 30 and the pay list.
On the main estimates,
[Translation]
the major changes deal with the secretariat's operating budget further to the change in its structure with the incorporation of the former Public Service Human Resources Management Agency of Canada. The operating budget was increased to officially account for the inclusion of this change, which was made in March 2009 and which can now be found in the main estimates for the Treasury Board Secretariat.
Therefore, there are minor adjustments that take into account the staff increases at Treasury Board concerning salary payments based on collective bargaining.
There are increases and reductions for some central votes. For most of them, you will see the same information as usual, that is, there is no change to vote 5 for government contingencies, vote 25 for operating budget carry-forward or to vote 30, which concerns funding for parental and other types of leave. All this stays the same.
The main change we have made is the elimination of vote 35, which was linked directly to the implementation of economic action plan initiatives, because it is no longer needed. This vote does not appear in the 2010-2011 budgets, because the funding expired, according to the terms and conditions that were approved in 2009-2010.
Those are the main changes that you will find in the main estimates and the supplementary estimates.
I appreciate your coming here this afternoon as officials of the department to talk about the main estimates overall and the supplementary estimates (C).
I have some questions about the main estimates and the overall estimates. I'm having a little bit of a challenge finding some of the information I've been looking for in these main estimates, and I hope you'll be able to help me.
In the main estimates I've been looking for some information on advertising--a page and a line in the main budget that speaks to the advertising costs and spending of government. When I consider institutional oversight and to ensure that we have effective oversight, we need to be able to have clear reporting to parliamentarians on the cost of a project or a program. In fact, under the Financial Administration Act, that is the case, and as officers, I'm sure you're well aware of that. So I'm asking two major questions that I'm having some difficulty with, and I'm sure you'll be able to help me.
I'm looking for the cost of advertising--the particular page and line--that would go to this program as a whole and/or by department for both that and the items and information around management consultants.
I'm hoping that under that kind of Financial Administration Act--and of course by extension the TBS officials, looking at the expenditure management group--you have the responsibility to ensure this particular institutional oversight. Can you help me along here?
:
I will be asking one or two questions and I will share the rest of my time with Mr. Nadeau.
Please explain this to me. I put the question to the minister and I may not have expressed myself correctly. I have trouble understanding why, in the main estimates, $500 million is allocated for paylist requirements, which are the same amounts found in the 2009-2010 main estimates. However, in the supplementary estimates, the amount of $100 million is requested by the Treasury Board Secretariat. It states that this funding is for severance pay, vacation credits payable upon termination of employment, parental benefits and termination benefits for ministers' exempt staff. I would like you to explain what is meant by ministers' exempt staff.
Second, in the definition of vote 30 under Treasury Board, there is no mention of paylist requirements for ministers' exempt staff.
Are they usually included in vote 30? Those are my questions. Please help me understand.
Madam Chair, I would say that it depends on the type of activity. For example, for the implementation of the economic action plan, Service Canada, which reports to Human Resources and Skills Development Canada, had to increase its staff fairly quickly, for the very reason that it had to meet the growing demand on the part of people who were unfortunately laid off and who wanted access to employment insurance benefits or training, as well as requests from employers who wanted access to transitional measures.This department succeeded in increasing its staff fairly quickly, but that was so it could cope with a fairly major increase in workload. Now it will have to begin reducing staff. It is possible to deal with these situations by hiring people who are not necessarily subcontractors, but who work on a contractual basis for a definite period.
In other circumstances, for example, when certain agencies were created, it was found to be more profitable to call on more contract workers than full-time employees. It allowed for greater flexibility in situations where the demand for and use of services fluctuated excessively. In some cases, we used the subcontractors because certain activity sectors were transferred. In such cases, service contracts were awarded and the costs were reduced as a result. Depending on the activity, the type of department, and fluctuations in use and requirements, we make adjustments according to specific situations.
:
Thank you, Madam Chair.
I have just a comment first.
Earlier when we had questions there was a reference by my colleague, Mr. Dewar, about the price and expense of advertising. I should just mention, since this is your first time joining us today, that we actually talked a lot about this a year ago, and the question from the opposition a year ago was why we weren't advertising more. I heard references to how much the Obama administration spent on advertising to promote the stimulus program, and a website was pointed out. Actually, one of Ms. Hall Findlay's questions was why we didn't promote it more.
Taking that suggestion from the opposition, Canada has done an excellent job at actually highlighting the stimulus investments we have seen. It is important to clarify that it was actually a suggestion from the opposition.
In terms of the fiscal management we are seeing in Canada and how it compares to other countries, there has been some positive coverage about how Canada's debt-to-GDP ratios are very strong and how the spending during this stimulus period is scheduled appropriately to phase out. Is there anything you could share with the committee to highlight for us why Canada is in such a strong position and how we compare to other countries in terms of our debt ratios?
:
Thank you, Chair, and thank you to our guests for their help in going through the estimates and some costs around governance.
I had a question with regard to the cost containment by departments, and we were trying to get from the minister how this would work. What I'm seeing is a picture where the departments are given a number and are basically told, go forth and find those--however you want to put it; some people call them efficiencies, other people would call them reductions, and other people would call them cuts.
Was there any direction given in terms of where they should find them, how they should go about doing this in terms of managers being directed by, obviously, their ministers and I guess ultimately by the president? Or is it just, here's the number, go forward and find the savings and efficiencies?
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No, I understood that fully. I guess the question for many of us is in regard to the government saying, “Here's the number, so go do it.” Each department has different responsibilities. If each department is treated equally in terms of finding the savings, there are concerns about how that affects the public, because every public servant doesn't give the same measure of service to the public.
I want to ask you a little bit about the question that was posed by my colleague, Monsieur Nadeau, regarding the hiring of temporary workers and those who come in to fill a need quickly. You mentioned the program the government had put out there that had to get people hired immediately to get going. I've been very concerned about this from the perspective of the growth in the temporary help agencies.
Department numbers going back a number of years were given to me and show spending on this going from over $100 million to over $300 million. The concern I have is that Treasury Board guidelines aren't actually always being followed. So I guess this is my question: how do we monitor departments? This is a trend. It didn't start with this government and it hasn't been in just the last couple of years.
The trend is that departments and managers go out and hire people, not just as in the example you gave in terms of the government's economic stimulus and not just when there was a passport bulge. They are hiring people who are what I would consider long-term employment candidates.
I'm just questioning what probes Treasury Board does to make sure that managers are following the guidelines and that they're making sure the guidelines are followed, because I have instances where they're not. This will be a concern, of course, as we go ahead, because departments are being told, “Find savings and here's the amount.” Maybe they make quick decisions and then they find out that they need to continue to provide the services. So they've not filled positions, they go out and hire people temporarily, and the costs actually increase over the long run. Something's got to give.
I'm questioning a bit about how we ensure that the guidelines are being followed by Treasury Board when it comes to temporary help.
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I'm not a permanent member here, but it seems to me it's fairly simple. When you have a new group of people coming before the committee, then you start anew. So I would advocate for what you had been doing. If there's extra time, it should be dispensed with appropriately in the sequence that you desire as the chair.
But you get a very different set of responses from a minister versus the officials--we all know that, and the government knows that, so with respect, it's not the same.
In the foreign affairs committee, we can have a study on free trade with the United States and have a go-around with the minister and have officials as a separate go-around. I would think it would be unusual and bizarre to break with that, and I think what you were doing was following the practice set at all committees.
It changes the sequence, and I was a victim of that because I was interceding when I thought it would be the NDP and it was actually the government. Each committee does that. But to change the sequence when you're looking at the estimates...the minister brings forward a set of capabilities and insights that is very different from those of his officials, and to start to loop them together is not appropriate. I think you should stick with what you have. Mr. Martin would want that. It makes it easier, it keeps it simple, and I think it's fair.
:
Thank you, Madam Chair.
I can understand why my colleague from the NDP would feel that way, based on the way the sequence of questions occurred. I'll come back to this circumstance here, where we Conservatives thought that, as the government, we would have the next question, and it didn't occur.
But I suggest that the point that I felt really did express some wisdom was if they're the same or related. If the one issue is you ask ministers to attend for two hours and they can, terrific. Frankly, I think they would make their best efforts and it would be what it is.
Having said that, that's a separate issue from the issue of the numeracy of speaking. Right now, every round, according to our formula—and we have a formula that I observe—would involve one hour and 32 minutes of questioning, with our getting our appropriate questions in whichever ranking, based on standings in the House. That's how this is all done, and I felt somewhat shortchanged.
You know I have more opinions than my Cape Breton mother, and I never had a chance to express them today. That may not be a loss to this committee, but I would suggest to you that, from our standpoint, if it is related, then I think the sequential sense of what we have feels fair to me. If it's different, I'd defer to the chair on that.