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By staying focused on balancing the budget and reducing the debt, we aim to keep taxes low and promote long-term economic growth.
[Translation]
We want to ensure Canada continues to be a place where people invest their money and grow their businesses. We want to ensure Canada will offer Canadians opportunities to work and contribute to their communities. These are the objectives driving us. And despite the large injection of stimulus funding we made over the past two years, I am pleased to say we are on track to balancing the books by 2014-15, a year ahead of the plan outlined in March.
[English]
Our government's commitment to this goal is clear in the responsible spending plans set out in the 2011-12 main estimates and supplementary estimates (A). The main estimates currently total $250.8 billion in expenditures for operating and capital costs, transfer payments, and the public debt charge. This represents a reduction of $10.4 billion in planned spending from the 2010-11 main estimates.
Also in the main estimates, program and operating votes are down by about $720 million, or 1.5%, from the 2010-11 main estimates. This amount is accounted for mainly by the winding down of the infrastructure initiatives we had under the economic action plan. The reductions also include a $3.4-billion decrease in planned statutory spending on interest and other costs.
Also shown in the main estimates is a $1.1-billion decrease resulting from the implementation of the harmonized sales tax.
The 2011-12 main estimates are in line with decisions from budget 2010 and previous budgets. Budget 2010 outlined our three-point plan to balance the budget. The first part of that plan is the winding down of the stimulus. The second part includes a number of measures to ensure the government lives within its means.
These include a freeze on the operating budgets of departments, and many other measures to restrain the growth of spending. But they do allow for some flexibility to implement budget priorities, among other things, and to accommodate cost pressures related to essential services.
[Translation]
Essentially, we have taken the same approach to balancing the books as Canadian families have. They have looked at their expenses and set priorities. They expect their government to do the same, and that's what we have been doing to great effect.
[English]
The third part of our government's plan to balance the budget includes continuing the strategic reviews on all of our program spending. This process requires departments to assess whether programs are achieving their intended results, are effectively managed, and are appropriately aligned with the priorities of Canadians and with federal responsibilities.
In 2010, the last year of the first four years of strategic reviews, 13 organizations were involved. They identified savings of more than $500 million annually. Together with measures to restrain the growth of national defence spending, this first cycle of strategic reviews resulted in $11 billion in savings over seven years, and more than $2.8 billion in ongoing savings.
Eliminating the deficit will also require new actions planned in the most recent budget, including the strategic and operating review. This process will involve the efficiency and effectiveness of government operations and programs in order to ensure ongoing value for Canadians. We will put about $80 billion of direct program spending under the microscope. The goal is to find at least $4 billion in ongoing annual savings by 2014-15. Every organization will be asked to develop two scenarios: one representing a 5% reduction, and one representing a 10% reduction in their spending. Unlike strategic review, the spending base will include all operating expenditures, including wages, salaries, and professional service contracts, for example, as well as grants and contributions, capital, and payments to crown corporations. Indeed, about two-thirds of the review base is represented by operating expenses. With this approach, we are taking a page from the private sector, which regularly conducts operational reviews to find areas for cost savings and productivity gains.
This is the first time in 15 years the government has conducted a review of the scope, and we believe that challenging times like these can also be opportunities to look critically at the programs and services we provide, their relevance, and how best to deliver them.
Let me also take a moment to describe the highlights of supplementary estimates (A), both government-wide and TBS-specific. Supplementary estimates (A) are part of the normal parliamentary approval process to ensure that previously planned government initiatives receive the necessary funding to move forward.
[Translation]
Specifically, the government-wide Supplementary Estimates (A) support the request for Parliament's approval of $2 billion in expenditures in 19 organizations. This amount is within the spending level specified in Budget 2010. In the Treasury Board Secretariat Supplementary Estimates (A), we are seeking $1.3 billion. This amount results from the Secretariat's role in funding a cash-out of severance pay for public service employees. This is happening in accordance with the collective agreement for three occupational groups, signed on March 1.
[English]
All these measures are part of the government's larger commitment to the prudent management of taxpayer dollars.
Mr. Chair, I'm proud of the government's economic record and its plan to ensure Canada remains at the forefront of economic growth and job creation. These main estimates and supplementary estimates (A) show the government is on track to implement its freeze on operating budgets.
As I mentioned earlier, program and operating votes are down by about $720 million from the year before. Also, if you compare spending in the estimates tabled to date for 2011-12 to total spending put before Parliament for 2010-11, you actually see a $2.7 billion decrease, excluding transfer payments and public debt.
Mr. Chair, we are also committed to improving the accountability and transparency in reporting to Parliament, and have been so for some time. For example, there are changes to the format of the 2011-12 main estimates. Part I now includes the trend of the budgetary main estimates accounts for the last ten years. In part II, for each department and agency we have added a brief description of the mandate or purpose of the department and the department's explanation of the major reasons for a material change in requirements from the previous year.
This change to the format of the main estimates is on top of improvements we have made over the past decade to supplementary estimates documents. These include a listing and description of horizontal initiatives requesting funding through supplementary estimates, and that means initiatives involving two or more organizations; an expanded introduction that includes descriptions of the largest dollar-value items; and summaries of authorities by ministry.
In addition to my responsibilities as President of the Treasury Board, I am also the minister responsible for FedNor, the Government of Canada's economic development organization serving northern Ontario. It's a position I've held proudly since 2006. In this regard, I'm joined today by Industry Canada's assistant deputy minister for regional operations, Mitch Davies, and at the back, FedNor's director general, Aime Dimatteo, should be around here somewhere, I hope.
Since April 2006, FedNor has invested more than $263 million in over 1,240 projects to benefit northern Ontario's economy. Our goal is to ensure that these investments and projects are having a positive impact on the economy of northern Ontario communities.
I was pleased to see that budget 2011 included a further commitment to northern Ontario of $4 million over three years to establish a cyclotron laboratory in Thunder Bay. This investment, through FedNor, will help create medical isotopes for early detection of cancer cells. The Government of Canada is pleased to support the Thunder Bay Regional Research Institute as it continues to develop new leading-edge technologies and products in medical science and research that will benefit the world.
Starting this August, we'll be taking another step to improve accountability and transparency in reporting to Parliament. We will require federal departments and crown corporations to prepare quarterly financial reports and to make them public. This will allow each department to provide a window into its own financial situation on a quarterly basis and give parliamentarians and Canadians enhanced information on government spending. It will facilitate timely oversight by parliamentarians of government expenditures and it will complement other information currently provided by the government, such as departmental performance reports and the annual public accounts of Canada.
I’m joined by the Secretary of the Treasury Board, Michelle d’Auray, and by other officials here, Bill Matthews and Christine Walker, and I previously introduced Mitch. At this point we are certainly here to take your questions.
Thank you, Chair.
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As I said two weeks ago, we thank the Auditor General for her 10 years of service to Canadians.
The first chapter contains a recommendation to the Treasury Board Secretariat to review the reporting practices so that Parliament is better informed of the total costs of interdepartmental measures.
In accordance with the Auditor General's recommendation, I asked my colleagues to review the government's reporting practices in order to establish greater clarity when it comes to the horizontal initiatives, for example.
[English]
It's important to understand that these procedures have been around for 99 years, I'm told. The roll-up procedure, for instance, that was used to report the G-8 legacy fund used a process that has been around for nearly a hundred years. That's not to excuse, but to inform you as to why a particular process was used at the time by the minister of infrastructure.
and I have concluded, quite rightly, that the Auditor General was correct, that this procedure in these kinds of circumstances does not meet our test, our high standards for being transparent to Parliament. The Auditor General has indicated that this was not a deliberate malicious act by myself or by Minister Baird, but there was room for improvement. We have taken that to heart and I have given, as I mentioned, instructions to the secretary that we will come up with a new procedure for similar situations so that there can be a greater transparency and accountability to Parliament.
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As the Auditor General said and wrote, every dollar was spent based on the priorities indicated by the municipalities, and we accounted for every amount spent.
[English]
That's an important aspect of this report. There has been no misallocation of funds. There has been no misappropriation of funds.
Having said that, as I said, there's no mystery here. When the G-8 fund was announced, there were quite a few.... I have 16 municipalities. North Bay also had their airport that needed some funding to be ready for the G-8 as we knew it at the time.
As a result of this process, there were over 242 projects that were arrived at to potentially be funded. I went to my mayors, not only the six. I went to all 16 municipalities. Six mayors were represented on a committee where we would convey information to them and they would convey information to us, but I went to all the mayors and said there was no way the Government of Canada would fund 242 projects and told them to get that out of their heads right then. I asked them to give us the best projects they had that conformed to the terms and conditions of the G-8 legacy fund. Those were the ones that we could at least consider for the fund.
So there's no mystery. I know MPs always consult with their mayors about which projects fit the terms and conditions of various infrastructure projects. So they said they agreed that 242 was too much and they suggested 32 or 33, which they conveyed to me, that conform to the terms and conditions that were set out by the Government of Canada. I conveyed them to the department and to the minister of infrastructure, at the time, and that's how that process went.
The Auditor General has said that she would like to have seen more paperwork at the front end of that, and you know what? Looking back on it, I understand her concern. The good news for taxpayers is that at the middle and back end of this process there were contribution agreements signed. There were terms and conditions that were met and verified, and not a penny was spent in a way that was not consistent with the contribution agreements and the terms and conditions.
Of course, Madame Turmel, you'll soon learn that there are always ways to improve, and governments are always looking for ways to be more accountable and more transparent—at least our government is. That's why we rely on the advice of the Auditor General. As I've said from the very beginning, you mentioned the Auditor General's report, and it was very clear that not a penny was misallocated or misappropriated. Every penny was accounted for, and that's the standard we set for ourselves, because Canadians set that standard for us. We're very conscious of that.
You mentioned the process going forward with the strategic and operating review. You asked some very specific questions. Of course we're not at the stage yet where any decisions have been made with respect to the strategic and operating review. There will be a whole process where we will be asking departments for their assistance and their collaboration as we move forward with the strategic and operating review. It would be premature for me to suggest any conclusions at this particular juncture.
We have mentioned, and we mentioned it during the election campaign, that we will be relying primarily on attrition to reduce the ranks of the public service. The advice I have received is that by and large, year upon year, attrition accounts for 11,000 employees who retire or resign or move on to another position in another part of our society and our economy. So that is a good base from which to start.
As I've emphasized to you at this committee, and as I've emphasized to Canadians, we are doing a whole review, though, of programs and spending and the operations of government among 67 departments and agencies. This is, as I said, the largest review that's been accomplished in 15 years. I dare say there will be some difficult choices that will have to be made, and we'll make them sensitively, but we'll make them in the public interest. That's our mandate, our strong mandate from the people of Canada.
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Let me change the subject.
You have spoken about your commitment to greater accountability and, in the throne speech, to greater openness. I'm talking about this hacking into the Treasury Board and finance department computer systems. I understand this happened five months ago, or for five months many of your employees have not been able to access their computers.
This strikes me as a very serious matter, and CBC reported that the cost of fixing it could be as much as a billion dollars. I have no idea whether that's true, but it seems to me you have said very little or nothing about this situation. The parliamentary secretary to the Prime Minister was on a TV show with me recently, and he could not commit to Canadians that their data was secure, whether it's health information, tax information, or whatever their private data. I think that's an extremely important matter for a government in 2011, and I think we have heard very little from you.
What can you tell Canadians about the safety of their private data, what you are doing to fix the situation, and how long this will take? We're out here knowing nothing about what is going on, and I do not think that is acceptable.
As you may recall, on March 1 officials were before this committee to present the supplementary estimates (C)--$920 million with the voted appropriations. When Parliament was dissolved on March 26 prior to supplementary estimates (C) being voted on, we were immediately driven by the Financial Administration Act, section 30. That is the section that dictates what we do for supply when Parliament is dissolved for the purposes of a general election.
The first question we had was whether we would need a Governor General's special warrant for the last fiscal year, knowing that if we did need one it would have to be issued by the Governor General no later than March 31. So we very quickly had to go through the material in supplementary estimates (C). We knew we had the $920 million of requests in that. We knew there had been no notices of opposition motions tabled.
We got back to departments. The first thing was, could they defer, and there were certain things that could be deferred--not many. Second, could they manage internally using any appropriation? If you'll recall, the test for a Governor General's special warrant is that it must be required urgently for the public good, which means core operations, but also there must be no other appropriation available from which to make that expenditure. So departments could, within their existing voted appropriations, if they had any funds available that were within that same vote, put those funds towards those needs.
The second test--and after that when departments had done their internal management--was to determine if we had other appropriations in the Government of Canada that could be used to meet those needs. For this I'm moving into the Treasury Board central votes. The central vote that we did have some funds available in was Treasury Board vote 5, which is the contingencies. We were able to administer $519 million from vote 5 to cover specific items in the supplementary estimates (C).
That included, for example, the Nortel purchase--for Public Works to purchase for DND; payment to Veterans Affairs Canada to cover the ex gratia payments for the Agent Orange; and a payment to AECL for their operating pressures.
At the end of the day, we were able to meet the requirements of supplementary estimates (C) by drawing on existing allocations--Treasury Board central votes--so we did not have to resort to Governor General's special warrants for that period.
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I won't take the whole five minutes.
Just briefly, for my New Democratic friends, and for my education also, the word “severance” is often associated with somebody being let go or being laid off because there's no more work. But in this instance, when we refer to it in here, and in our case in the vast majority of the changes, severance also refers to people choosing to sever their employment relationship with the Government of Canada. So it's not that they're getting laid off. It's not that they're getting fired. Because of agreements that have been signed in the past, federal employees, if they decide to leave the federal employ and go to the private sector or to the province of Quebec or Ontario or go work somewhere else, are entitled to a severance payment.
In here we are saying there are no more severance payments in the future for new employees, but for those of you who have qualified for that severance, we are bulk-paying you up front, whether you want to take half or full payment, but we're calling it severance.
My point is this. I think when it comes to language, we need to be careful. I don't know how this translates. I'm not French. I don't have access to how it relates in French. But for here, if we were to go out the door and say that in supplementary estimates (A) we had $1.3 billion in severance package money that we didn't have before, it would sound as though we were laying off a whole bunch of people to pay them out. But that is actually not the case. This is for people who, if they were to choose to leave the federal service, would be entitled to this payment.
Is that correct?