:
What we have on slide 4 is what's in supplementary estimates (C) itself, voted items of $1.5 billion. We have a decrease of $0.1 billion for a total of $1.4 billion.
I will take this opportunity to remind members of the distinction between budgetary and non-budgetary items. Budgetary items are items that affect the bottom line of the government. Non-budgetary items are things like loans, investment advances, where if all goes as planned, we would not end up incurring expense. We can talk later about Canada student loan writeoffs if that's of use, because that's a really good example on this front.
Statutory items in supplementary estimates (C) are not voted on by parliamentarians. They are here for information. We have a variety of changes in the estimates on that front, but it's worth paying a bit of attention to as we go through this deck.
Slide 5 is if you're curious about what the estimates total looks like. I always warn people about comparing supplementary estimates (A) for one year versus (A) for the previous year, because there are timing differences, but when you get to the end of the cycle, it is worth the time to step back and see what the picture looks like this year versus last year. If you compare 2012-13 versus 2011-12, you will see that we have voted $98.6 billion in 2012-13 versus $99.9 billion in the previous year. On the statutory front, you'll see a slight increase. We are at $160.4 billion versus $159.7 billion the previous year. Overall for the total, $259 billion in authorities including supplementary estimates (C) versus $259.6 billion in the previous year. It's worth understanding the difference between voted and statutory here.
Where I would spend most of my time is on slide 6, Mr. Chair. Those are the major voted items you'll see in these supplementary estimates (C). As I mentioned, on the previous slide in the $1.5 billion in voted, there are some really major items that make up that amount. I'll just walk through those one by one, if that's of use to the committee.
Under National Defence, for the Canadian Forces service income security insurance plan, there's the amount of $726 million. That's a payment that's going to Manulife as a result of an agreed-upon settlement. There was an agreement to pay back some amounts where we had offset veterans disability amounts versus the Canadian Forces disability amount. They're now being kept whole so that agreement's been reached. Manulife had advanced the payments to the members receiving them so we're now topping up Manulife for that amount.
There is the amount of $438 million, again for National Defence. There are two items in there. You'll be familiar with part of it. We have spoken to this committee before about the elimination of severance benefits as part of the collective agreements. National Defence is part of that process as well, so in that $438 million there is roughly $200 million for severance. The balance of that relates to the Canada First defence strategy.
There is the HRSDC writeoff of unrecoverable student loans of $231 million. This is a great example of budgetary versus non-budgetary. When these loans are issued, they are non-budgetary because we expect to recover them. When we get to a point where we are writing them off because the six-year statute of limitations has expired, they now become budgetary because we're taking an expense for the writeoff of the amounts. There's $231 million for that. I'm happy to speak more about that if it's of interest.
There's the amount of $144 million, for National Defence again, for the training mission. It relates to a NATO mission. It's for training for both the Afghan National Army as well as the police force.
On Foreign Affairs, the amount of $108 million for the London high commission is an interesting one. In that case, they're co-locating or combining two buildings into one. Currently we occupy two buildings in London. Some space adjacent to one of the buildings is being bought so they can be housed in one location. This amount is really flow-through financing. When we sell the second building, we will recover this amount, but we're using this amount to buy the adjacent property and get going on the consolidation there.
On the Copenhagen Accord, I think you may have seen before that there are some amounts for CIDA, Environment Canada, and Parks Canada related to that agreement.
On CIDA, I should mention the $100 million for child protection, maternal and newborn health. This is not new money. CIDA is moving their funding mechanism. We're going from a contribution to a grant, but because of that we have to go to Parliament to get approval to increase the grant ceiling. So it's not new money here, but we're moving from contribution to grant.
Last, we have Public Works for $85 million. I understand that Public Works is scheduled to appear shortly after us, so I'll let them explain their bit here.
On the statutory front, slide 7, again just for information purposes, Human Resources enhanced employment insurance benefits relates to budget 2009. The intent there is to hold the EI account harmless for the additional benefits. Initially $2.9 billion was set aside, if I recall, so this is to top that up to cover off all the expenses there.
For Human Resources again, on guaranteed income supplements, we're increasing the forecast by $143 million. You can split that into two things. One is an increase in the number of recipients by about 13,000. The balance of $74 million relates to an increase in the actual benefit payment per recipient. So there are two pieces to that.
On the disability savings grant program, again from Human Resources, we have $115 million. The issue there is they've changed the criteria to allow carry back. It's much like you would have if you think about income tax and the carry forward, carry back of losses. They basically expanded it to allow carry back, which is going to increase the amounts paid out. There's $115 million there.
For Human Resources again, on old age security, it's $105 million. You can split that again between an increase in the number of recipients by about 6,000 as well as an increase in the actual entitlement.
Finally, there's a decrease in the forecast related to unmatured debt—so that's interest—of $762 million, which relates to interest rates.
On slide 8, we have the horizontal items. Just to remind you, the horizontal items are items where we have more than one department receiving funding. We dedicate some paper up front in the supplementary estimates (C) document to go through horizontal items so members and parliamentarians can see which departments are receiving money. We do have the list of those who are receiving funds through supplementary estimates (C).
The Copenhagen Accord I've already touched on.
On the international crisis response for $60 million, that's a change in the way we're actually funding that. That is supposed to be and is always intended for things like earthquakes and food emergencies around the world. With the process we had in place before, it was very time consuming for CIDA and other organizations to get their money. Given that it's a crisis response, we thought it would be better to actually put the money in the reference levels. In case there is a crisis, the department can actually take whatever required action they need to on a faster basis.
The other ones I'll flag for you here.
The modernization of the pay administration is for Public Works, in the amount of $26 million. They, as well as Shared Services Canada, are coming up next so you may want to have questions about that.
Finally, government advertising programs, I know, get some attention so I'll mention it. There's $1 million in here for advertising. That's totally related to Canada Revenue Agency around advertising for tax credits, deductions, and rules.
On slide 9, I did want to talk again about the budget 2012 spending review. We have spoken about this before, but you will see in the supplementary estimates (C) a line that says, “Less: Funds available within the Vote”. You may recall last year when we tabled the main estimates it was in advance of the budget and we did not have the budget 2012 reductions. As departments come in for new spending, if we have moneys that were in their main estimates that they no longer have access to spend, we do a netting of the two. That's happened again here, and we've highlighted for you where we've netted off those amounts. In supplementary estimates (B) we had a netting of $483 million. In supplementary estimates (C) we have another $58 million. If a department does not come in for additional funds, we simply freeze the money centrally and put the controls in place that way. Basically, there's no point giving a department access to new money if they can't spend what they already have, and that's what this netting is all about.
Finally, on slide 10, before I pass it over to the chief financial officer for Treasury Board Secretariat, there is $1.5 billion in voted expenditures. I did highlight some of the major changes to statutory forecasts for you. Not all departments are in here. We have 49 departments and agencies here. Again, if you're not looking for additional funds, there's no need to be in this document, so there are only 49 departments in here. If you're looking for a certain department and you don't see it, it's because they've not come forward with additional spending requirements.
As a final reminder, at the end of the supplementary estimates (C) is the draft of the appropriation bill. It is the appropriation bill itself that Parliament approves. These estimates documents are simply to help support your study of that, but you should spend some time looking at the appropriation bill itself because that is what Parliament approves.
With that, I'll turn it over to Christine Walker to speak quickly about Treasury Board Secretariat itself.
:
There are two points that I'd make.
Operating efficiencies are different from internal services, and 70% of the cuts are in operating efficiencies.
Just to give you an impression of the distinction, internal services are HR, finance, legal, all that stuff. Operating efficiencies are a little bit broader. If we decided we could deliver a program with less travel, that's an operating efficiency. It's not internal services. It's not a reduction in terms of how the program is delivered, or the program itself; we're just delivering it more efficiently.
I would say that 70% of the cuts or reductions in operating efficiencies are more than just internal services. There is some confusion around that.
The second part of your question, around the confusion around the Parliamentary Budget Officer's numbers and the numbers from Treasury Board Secretariat, we have a process in place where we have the same numbers he does. It would be useful if we could see his reports in advance so that we could actually work through the disputes. I think we would all agree that Parliament is not well served when we get two sets of numbers out there.
So he's put his numbers out. We've looked at internal services. We see a 6% reduction versus the previous year; he has an 8% increase.
We can't recreate his numbers, but I think we would all agree that we would be in a better situation if we had a chance to agree on those numbers before they were produced.
:
Good morning and thank you, Mr. Chair, and members of the committee.
My name is Alex Lakroni and I am the chief financial officer of Public Works and Government Services Canada, PWGSC. I am pleased to join the committee today to speak about the department's 2012-13 supplementary estimates (C).
I am accompanied by my colleagues, John McBain, the assistant deputy minister of real property branch, and Brigitte Fortin, the acting assistant deputy minister of accounting, banking and compensation branch of PWGSC.
Let me start by restating for the committee members that PWGSC is the government's principal common service organization providing government departments and agencies with services in support of their programs. These include: procurement; office accommodation and facilities; architectural and engineering services; construction, maintenance, and repair of Public Works and federal real property; translation and related services; and pay and pension services.
[Translation]
The serves as the Receiver General for Canada and has authority for the administration of pay services for federal employees. The minister is also responsible for maintaining the Public Accounts of Canada.
PWGSC's vision is to excel in government operations, by delivering high-quality services and programs that meet the needs of federal organizations while ensuring sound stewardship on behalf of Canadians.
PWGSC plays an important role in the daily operations of the Government of Canada. As its principal banker, accountant, central purchasing agent, linguistic authority and real property manager, the department manages a diverse real estate portfolio that accommodates 269,000 federal employees in 1,819 locations across Canada, including the Parliament buildings. It injects more than $14 billion annually into the Canadian economy through government procurement. It prepares the annual Public Accounts of Canada and manages a cash flow of more than $2 trillion a year. It translates more than one million pages of text on behalf of other federal organizations, and provides translation and interpretation services for Parliament and its committees.
[English]
In supplementary estimates (A) this year, PWGSC requested $237 million primarily for the rehabilitation of the Parliament Buildings. In supplementary estimates (B) this year, PWGSC did not request any additional funding. At that time the department explained that existing appropriations were sufficient to cover any additional program requirements and deferred its request for funding until the final annual estimates exercise. This deferral is a reflection of the department's emphasis on responsible budget management practices.
The supplementary estimates (C) request $198 million for PWGSC. However, this request was reduced by $50 million as a result of funds available within PWGSC and transfers between departments, bringing down the total net request to $148 million.
The first notable item in these estimates is $85 million for real property. These funds are required to cover non-discretionary costs in utility, rent, and fit-up incurred during renovations of crown-owned and leased office buildings.
Another $33 million is requested for office accommodation for various departments and agencies that have received approval from governments, mainly for renewed priority programs such as those related to aboriginals, agriculture, security, and national defence.
PWGSC is also seeking access to $32.5 million to deliver a series of projects on various engineering assets such as dams, bridges, and crossings. Examples of projects delivered by PWGSC include work on the Esquimalt Graving Dock and the Alaska Highway.
Access to $23.2 million in funding is being sought for modernization of pay services. The funds will be used to complete the project definition phase and to commence the implementation phase of replacing the 40-year-old government pay system.
The last of the notable items is $15.3 million needed to consolidate all pay administration services into one centre of expertise in Miramichi, New Brunswick, ensuring the sustainability of pay administration and contributing to a more effective and efficient public service that offers better value for money for Canadian taxpayers. As announced in budget 2012, these estimates also return funds as part of PWGSC's contribution to the deficit reduction efforts.
Let me now provide an overview of the impact of these estimates on PWGSC's budget. Taking into account these supplementary estimates (C) for 2012-13, PWGSC's total gross budget would become $6.3 billion. As the department receives $3.5 billion in revenues from other government departments, once these revenues are taken into account, PWGSC's net appropriation is reduced to $2.8 billion.
I'll draw your attention next to the department's operating vote, which has two basic components, totalling $3.6 billion: $1 billion is needed to deliver on our core programs, such as central purchasing and banking, public accounts and payroll and pension services, and internal services; and, $2.6 billion is required to pay for rent, fit-up and utilities for government-wide accommodation, Receiver General functions like payments, and translation services to Parliament. PWGSC also has a capital vote of $578 million, primarily to invest in Government of Canada buildings and infrastructure.
I am pleased to report that PWGSC has shown leadership in the area of sound financial management and has instilled a culture of budget management excellence throughout its various programs. The department's forecasting accuracy between December 31 and year-end for the last two years exceeded 99%. PWGSC has also strengthened its oversight role over financial matters, and rigorous practices have yielded economies, such as in travel and hospitality.
I am pleased to say that these economies were realized while providing comprehensive support to our employees as the department reduced the size of its workforce. Overall, 96% of employees affected by the first and second years of strategic review have secured alternative employment or have left the public service. In addition, of the employees affected in April 2012 by the implementation of the deficit reduction action plan, 92% have already been placed or have left the public service.
[Translation]
In June 2012, our department implemented additional adjustments further to changes in business volumes that affected 86 employees. Of those, 90% have already been placed or have left the public service. PWGSC has accomplished this transformation largely through the efforts of our departmental priority placement process.
Finally, Mr. Chair, I want to say that our departmental efforts to support our most important asset—our employees—have been recognized for a second year in a row. PWGSC has once again been chosen as one of the top employers in the National Capital Region for 2013. The National Capital Region's Top Employers is an annual competition to recognize the Ottawa-area employers that lead their industries in offering exceptional places to work. We are proud of this award, and we are committed to maintaining our standing as an employer of choice.
Members of the committee, thank you for your attention. My colleagues and I would be pleased to take your questions.
Thank you.
:
Thank you for your question.
As you know, Public Works and Government Services Canada is regarded as a leader when it comes to managing its workforce. We've been successfully placing employees since the strategic review. Other departments look to some of the practices we've put in place as the standard to follow.
We've set up a very strong governance system that includes planning and employee monitoring. And we've incorporated it into the strategic review, the operational review following the strategic review and the client revenue adjustments that happened in June.
We established a placement unit solely to help place affected employees. Every assistant deputy minister has personally committed to making sure that affected employees in their respective organizations are placed. Each of them is required to prepare a plan for the integration of employees from other organizations. In addition, we have excellent relationships with the unions, and they are very satisfied with the progress made so far.
Allow me to share a few figures. As of January 31, 2013, we had 13,172 employees, so we've seen a 5% drop since the end of March 2007. Our attrition rate is about 8%, or roughly 1,000 employees a year.
Under the strategic review, we had 381 affected employees for the first two years, and of those, we've managed to place 96%—so 364 employees out of 381—either internally or within the public service.
Under the operational review, 140 out of 163 employees were affected because 23 positions were vacant. Of those 140 people, 129 have already been placed, resulting in a placement rate of 92%.
So in all, 803 people were affected and 699 were placed. That puts the placement rate at 87%, which is pretty impressive given that we're in the first two years.
That pretty well covers the efforts our department is making. The numbers speak for themselves.
:
When Shared Services Canada was created, a calculation was done, a government-wide formula was used. Funds were transferred to cover three aspects, all related to technology infrastructure. The first was everything having to do with telecommunications. The second was everything involving data centres. And the third was everything related to email.
The calculation was done for Public Works and Government Services Canada, and we determined that $113 million had to be transferred. As the numbers were being finalized, however, we realized a few things.
First off, some services were going to be delivered to us on a cost-recovery basis. For instance, Service Canada would provide us with computer support on an optional basis.
But the amount transferred includes two types of expenditures that are being returned to us, and that is the reason for the transfer. First, they are expenditures that were counted but that will be spent in only one year. So they aren't ongoing expenditures. For example, some expenditures are related to the management of the modernization project, which is a project that will be phased out gradually. It's not an ongoing transfer. So that money comes back to us and represents $3.8 million.
Another amount is allocated to MERX, the procurement system. That system does not fall under Shared Services Canada's mandate. So $3.4 million was returned to us for that system.
Lastly, there is $4 million for the service clusters. Public Works and Government Services Canada delivers services to small and medium-sized departments to support technologies such as PeopleSoft and SAP. And $4 million was transferred for that. The amount was returned to us so we could continue to deliver services.
Basically, a readjustment of initial transfers was done.
I'd like to ask a question about reallocations or funds available. I notice that in total it's about $48 million. Two of the larger ones here are the federal contaminated sites action plan, at $32 million, and the Sydney tar ponds, at $5.6 million. It means that of their total budget for 2012-13, they've failed to spend, in one case, $32 million, and in the other case, $5.6 million.
It would be interesting for me to know what the total budget was and what proportion of the total budget did they not spend. If the contaminated sites total budget was $50 million, then they spent $18 million and failed to spend $32 million. It would be interesting to know that number.
Also, I'd like to know, in the case of the contaminated sites and the $32 million, for example, does this mean that the money not spent in 2012-13 will be added to the estimates for the following year, 2013-14, so that what they didn't spend this year they will be scheduled to spend next year? If not, does it mean it just disappears off the face of the planet?
There are two dimensions to that question. What's the total budget? For the part that is unspent, is it transferred to expenditures in the following year?