Proceedings of the Standing Senate Committee on
National Finance
Issue 42 - Evidence - June 4, 2013 (Morning meeting)
OTTAWA, Tuesday, June 4, 2013
The Standing Senate Committee on National Finance met, in public, this day at 9:30 a.m. to study the expenditures set out in Supplementary Estimates (A) for the fiscal year ending March 31, 2014.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this morning, we are going to begin our study of Supplementary Estimates (A) for the fiscal year ending March 31, 2014.
[English]
Before we begin, I would like to advise members that there will be a number of guests visiting in the next short while. I will tell you who they are now, and we may have an opportunity to introduce them individually.
They are parliamentarians visiting from Guyana in South America, and they are being sponsored by the Canadian chapter of the Global Organization of Parliamentarians Against Corruption. There are parliamentarians plus their staff — about five or six of them — and they are particularly interested in the estimates process and government supply. We are hosting them this morning when they arrive, and they will be visiting appropriate House of Commons committees later this week.
We will get on with matters now. We are very pleased to welcome back, from the Expenditure Management Sector of the Treasury Board of Canada Secretariat, Bill Matthews, Assistant Secretary; Sally Thornton, Executive Director; and Marcia Santiago, Senior Director. Those who have been on the committee for a while will know that we are welcoming back a team that helps us immensely in understanding the estimates process.
We are dealing with Supplementary Estimates (A) today and tomorrow, and if there are other witnesses after we finish those two panels, following the Treasury Board of Canada Secretariat, please let us know; otherwise, you will find that these Supplementary Estimates (A) are quite sparse compared to some of the others, which is good.
Mr. Matthews, you have the floor, sir.
[Translation]
Bill Matthews, Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat of Canada: Thank you, Mr. Chair. As you mentioned, I am joined today by a few colleagues to help answer the committee's questions regarding Supplementary Estimates (A) for 2013-14. Before answering the committee's questions, I would like to take a few minutes to outline the main points of the expenditure plan.
[English]
Starting on slide 2, we will follow our usual presentation that we give you in starting the committee's study of supplementary estimates. As you mentioned, Mr. Chair, this is a fairly sparse supplementary estimates, in terms of both dollars involved and the number of organizations involved. I think that should make your study a little more efficient than in past years, or at least a little easier. However, I will take some time to go through the usual points we highlight.
I will give you a reminder on how the estimates themselves are organized. We will talk about that, and talk about changes to the presentation of the estimates, because they have been changing over the years and we like to make you aware of the changes we have made in presentation. We will then get into what is in Supplementary Estimates (A) in terms of totals and dollars, and then examine the major items from a voted and horizontal perspective. As has been my recent habit, I will finish up by providing an update on the House of Commons Standing Committee on Government Operations and Estimates and their ongoing work on the Parliament scrutiny of the estimates.
Let us go to slide 3. In terms of the introduction of the estimates, the introduction does have the summary of the estimates to date and provides totals for these estimates, which is roughly $1.1 billion; we will get into some details later. It describes the largest items in terms of dollar values for voted initiatives. Going from memory, if you took the largest six items in these estimates, I believe you would be over 90 per cent of the total spending proposed in these estimates, so it is fairly easy to track.
We have a section on the changes of the structures to government, and there is one example I will give now. In the Supplementary Estimates (A) transfer of supervision and control for the Hazardous Materials Information Review Commission goes to Health Canada as result of Jobs and Growth Act, 2012. That is highlighted in this section here.
The other thing I will highlight is that on the TBS website, in addition to the supplementary estimates themselves, there is much more information online in terms of statutory forecasts, estimates by strategic outcome and programs, planned expenditures by standard objects, and transfers between organizations. Therefore, there is a bunch of supplemental information available online to supplement the estimates themselves.
I will also highlight at this point that we have had some discussions during past meetings about central votes and allocations out to departments. There are no such allocations yet this year, so there are no tables posted on central votes.
We are on slide 4. I mentioned I would spend a bit of time talking about changes to the presentation of the estimates. Some of these you are already aware of, but some are new. Everything is now online. I believe we mentioned last time we were here that departments and agencies are now presented alphabetically. That makes it easier to find organizations, but it also creates some challenges for us when we are findings organizations in the English version and in the French version. I would make a plea at this stage that if we get into detailed questions about organizations, we give everyone a chance to find the organization in whatever version of the document they are looking at because the English and French are in different orders.
There are tables online related to strategic outcome and program that line up with the 2013-14 program alignment architecture. An ongoing theme that we are seeing is the request for additional information by strategic outcome and program, so that is now online. The other thing you may notice if you get into details is that the explanation of requirements piece in the estimates is now down to the dollar. There is no rounding involved there; it is now down to the dollar, and that is just a subtle change.
You will also notice that there is additional information in terms of history and graphs to make presentation easier, but these are the ones I would highlight for now.
Slide 5 will actually get into the dollars we are talking about in these Supplementary Estimates (A). This is the slide that shows you the split between budgetary and non-budgetary, as well as between voted and statutory. We are dealing here today with all budgetary, so there is no non-budgetary.
I will remind you that non-budgetary items, though not relevant today, are things like loans and investments. Budgetary items are what we are dealing with today. The vast majority in the Supplementary Estimates (A) is voted items; you have a small amount related to statutory items of $8.2 million, and that relates to employee benefits. However, as can be seen, the vast majority of the $1.1 billion is voted items for discussion today.
On slide 6, I will caution, as I always do, that it is early in the year to compare this year versus previous years, but we always do anyway. Regardless, I will give you that caution, and then I will give you the comparison. Supplementary Estimates (A) is typically the second smallest; if we have three supplementary estimates, (B) is typically the largest, (C) is typically the smallest and (A) typically falls somewhere in between. Therefore, I do not put a lot of faith in year-over- year comparisons until after Supplementary Estimates (B).
That being said, these Supplementary Estimates (A) are smaller than in the previous couple of years. If you were to look at where we were at this point in the fiscal year versus last year, the voted amount is down by $6.5 billion, and that is partially offset by an increase in the statutory amounts of $5.3 billion. I believe when we were here to discuss Main Estimates, we spent some time talking about why the statutory amounts were forecasted to increase. That was largely around the health transfer as well as old age benefits because of the demographics of the population. That is not a surprise, but I thought I would mention it.
Therefore, voted is down and statutory is up. In total, we are down over the previous year by just over $1 billion. Again, I do not get too excited about comparisons until after we hit Supplementary Estimates (B).
On slide 7, I thought it might be interesting for you to get a sense of the budgetary spending and how it breaks down between transfer payments, operating and capital, and public debt. On the left-hand side of the slide, you will see the comparison for the totals from 2013 versus where we are so far this year for 2013-14. That is a cautionary note that we are comparing a partial year against a full one.
However, you will see that interest on public debt for the current fiscal year is largely in line with the previous fiscal year for expenditures related to public debt. The transfer payments are slightly above the previous fiscal year — less than 1 per cent — but slightly above.
You will see the decrease in operating capital, though. It is roughly 9 per cent lower than last year. That should not be a great surprise simply because of where we are in the fiscal year; it is still early on. There are still some ongoing restraint measures that are working their way through the system, but we will present this slide again at the next supplementary estimates to give you a better sense of where we are at. Regardless, it is an interesting way to look at the government spending just to get a sense of the current year versus the previous year.
On slide 8, we can talk about the major items included in this these supplementary estimates. As I mentioned, you can get at the vast majority of the spending by looking at a few major items, and I will walk you through those.
The first item on the list is Atomic Energy Corporation Limited, Chalk River Laboratories. This is a Budget 2013 item for $260 million. If you are interested in how that splits out, $177.5 million is for the Chalk River Labs, $57.8 million is for isotope production and then $25 million is related to the end of severance for voluntary departures. That is a breakdown of how the funding goes to AECL.
The next item is for Public Safety. It is the Disaster Financial Assistance Arrangements program, $230 million. We spoke about this program in the past. It is an interesting program in that the federal government reimburses provinces and territories for natural disasters. It is an interesting one to track as the eligibility for funding depends on the actual cost of the disaster itself, and it can sometimes take provinces quite some time to accumulate expenses related to disaster. You will often see a lag in terms of provinces coming in to get their funding. To give examples of recent disasters that were eligible for funding under this program, in 2011 there was spring flooding in Saskatchewan and Alberta, and the 2012 spring flooding in New Brunswick. Be aware that there is often a lag between when the provinces can tally up all their spending related to the cleanup. They then submit those invoices, which get audited and eventually reimbursed by the federal government.
For Agriculture Canada, Growing Forward 2, we have two items on this list. The first is Cost-Shared Strategic Initiatives of $207 million. Those initiatives are shared with the provinces and territories from a funding perspective, a 60-40 split. The other item for agriculture is the other part of Growing Forward 2, which is directly funded by the federal government, for $47 million. We can speak more about those if you like, but you have invited officials from Agriculture Canada to appear at another meeting, so you may want to hold your questions for them.
Indian Affairs specific claims settlement for $167 million relates to a 2007 budgetary commitment. The idea was $2.5 billion over 10 years. If you rough that out to an equal amount each year, the rate at which they settle claims is never all that smooth; it is kind of lumpy. We move that allocation as they need it, depending on how quickly they are able to settle claims.
The next item on the list is VIA Rail. There is $99 million for pension requirements relating to the legal obligations around funding pension obligations.
The agriculture item, the second one, I have already mentioned. It is the direct federal funding piece.
There are two horizontal items we should speak to. There are government advertising programs for $20 million that have been flagged. That covers four departments: Natural Resources Canada, Health Canada, Human Resources and Skills Development Canada and Canadian Heritage.
Last on this list, the second horizontal item, is the Centres of Excellence for Commercialization and Research for $19.1 million. That $19.1million is a result of the winners of the competition. There are four winners, and I am happy to speak to who they are. However, that money is split amongst four winners of the last competitive process.
Slide 1 shows $1.1 billion, as I mentioned, the vast majority in budgetary voted spending. Sixteen departments and agencies are here, so not a lot in terms of numbers of organizations. In the supplementary estimates you will see the appropriation bill that this relates to.
I did promise you an update on the work of the House of Commons Standing Committee on Government Operations and Estimates. You may recall they have been looking at how Parliament scrutinizes and approves funding for departments. The government had responded, but there were two things left to respond to, the question of accrual versus cash appropriations. The government had committed to get back to the committee and let them know their decision on that front to finish their study.
The government indicated it will stick with the cash basis for appropriation. It is felt it is more understandable for parliamentarians and senators. That was based on some consultation with other countries, as well as work by the Organisation for Economic Co-operation and Development. There was a study that went to support that. Those documents have been shared with this committee.
The second piece the government was on the hook to provide was a mock-up for what a new vote structure might look like. To remind committee members, the vote structure as it stands now is capital, operating and maintenance, grants and contributions. What was suggested by the committee was that perhaps a vote structure based on program or strategic outcome would be appropriate. The committee was provided with a model for discussion around what a vote structure would look like by strategic outcome with supplemental information by program alignment architecture. That was tabled before the committee's discussion as well. There is no formal commitment to actually change; it is there for discussion at this stage. Those are the two pieces of information the government was on the hook to provide the committee.
The last bit I will flag for you is that there was another government commitment to produce a database to allow for easier viewing and tracking of spending. That database is now live. We have offered up a demonstration for this committee at a subsequent date if it is of interest. I should flag for you that that is the first version of this database. It has historical spending only. If you want to understand what spending looked like for a certain department or all departments, it offers a view of spending against authorities, what they spent against their vote. It offers spending broken down by standard objective, professional and special services, telecommunications and travel and all sorts of breakdown there. The third one is attached to the program.
What is really nice about this tool is how easy it is to find organizations and to track trends in spending. Where there is commonness across organizations, with one click you can do a comparison for all organizations. For instance, every organization has a program structure called internal services — finance, human resources, IT. With one click you can see what every department spends on internal services because it is common across all organizations.
That database will be supplemented with additional information going forward. The next version of the database will include "in year'' spending so you get a sense of what departments are spending during the year. Eventually we will add the future bit, planned spending and performance measures. We thought it was important to get a version up so people can see the potential. It is incredibly easy to use. We have offered up a demonstration of that database at a future date.
I think that is all I would like to say before I turn it over to you for questions.
The Chair: Where do we find the database you were talking about?
Mr. Matthews: It is on the Treasury Board Secretariat website. That is the easiest link, but there are others as well.
Sally Thornton, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: If you Google "expenditure database,'' today it is trending number one, but is usually in the top five. Look for the one with the TBS link.
[Translation]
Senator Hervieux-Payette: I think those who are interested in our meeting today should be able to access that document and see the tables since they are on slides. Even though Mr. Matthews is doing a good job going over the document, that does not change the fact that people are not able to see all of the information.
Going forward, when there are tables, can we have them projected onto the screen while the witness is speaking?
I would like to know whether this document will appear in the record of the committee proceedings, in other words, the document in its current form, in addition to the commentary. People will have trouble following the commentary without the document. I just want to be sure that anyone who is interested in these financial matters is able to access all the information and that we are transparent, a word that is all the rage right now.
I would therefore ask the chair to make sure that all the documents are available to the general public.
The Chair: Thank you, that is an excellent idea. We can easily do that.
Senator Bellemare: I would like something clarified.
The Chair: Senator Bellemare, you are on the list, I assure you.
[English]
Senator Callbeck is the first one on my list who has indicated an interest. She is from Prince Edward Island.
Senator Callbeck: Thank you for coming again this morning.
On the Canadian Institutes of Health Research, the $11 million, certainly I support the objective, which is to match clusters of research expertise with the business community. We have 21 centres, so how is that money going to be distributed? Does it mean that one centre will get it or several?
Mr. Matthews: Ms. Thornton may add more detail, but typically that funding gets distributed across centres; it is not just one. I am speaking about their overall budget. This amount in Supplementary Estimates (A) may be dedicated, but there is also a transfer involved here.
Ms. Thornton: In this instance, that $11 million will go to the winners of the last competitive process, which includes the Prostate Centre's Translational Research Initiative for Accelerated Discovery and Development in Vancouver; MaRS Innovation, which does therapeutics and medical devices in Toronto; the Centre for Probe Development and Commercialization in Hamilton; and the Centre for Drug Research and Development in Vancouver.
I will also add that all of the currently funded centres are posted through the websites; you can link through CIHR or any of the granting agencies and see the full list of organizations that have received funding through these organizations, as well as the amounts.
Senator Callbeck: Regarding this $11 million, was there money in the budget and is this being added to it, or is this the total amount for the year?
Mr. Matthews: They have money in their Main Estimates already; this is a supplementary item to what is already in their estimates. This is specifically for the last round of winners for the competitive process, so it is tied to the four organizations.
Senator Callbeck: Thank you. I know that in these supplementary estimates, there is $20 million for advertising, but Canadian Heritage has asked for $500,000. Is any of that money earmarked for preparation for the one hundred and fiftieth anniversary in Charlottetown?
Mr. Matthews: That is exactly what that is for, if I recall correctly.
Ms. Thornton: It is actually for the development of a visual identity advertising concept in preparation for 2017, the one hundred and fiftieth anniversary.
Senator Callbeck: That is perfect. Thank you.
The Chair: She would probably like a little P.E.I. after that.
Senator Callbeck: Then we go to the Department of Human Resources and Skills Development Canada. There is $1.6 million for the Enabling Accessibility Fund, which supports grants for renovation, construction and retrofitting activities within Canada to help organizations to better serve people with disabilities. I again applaud the initiative. Is there money in the original budget for that, and we are adding $1.6 million, or is this the total figure?
Mr. Matthews: There is more money than that; this is related to money allocated in a previous fiscal year. However, there were delays in getting some of the agreements signed and getting this out the door. This is effectively what we call a reprofile from a previous year. It was money allocated in a previous year; it was unspent; they had plans for this but were slower than planned in getting the money out the door, so they have moved it into the current fiscal year.
It does not represent the total of the initiative. Rather, it is an amount that was previously allocated, was not spent last year, and is being spent this year.
Senator Callbeck: What is the total for the initiative of this year?
Mr. Matthews: I do not have that with me.
Ms. Thornton: Historically, it was originally announced in 2006 as a $45-million program for three years. It was then renewed in 2010 for additional three years — $45 million — and it was Budget 2013 that announced the extension of the program. It is $15 million per year on an ongoing basis.
Mr. Matthews: To be fair, this funding is money that was not spent in the previous fiscal year; it is not new money.
The Chair: Can we find that in the Supplementary Estimates (A)?
Ms. Thornton: The request?
The Chair: The amount that you have just described — the $15 million.
Ms. Thornton: No, that will be —
Marcia Santiago, Senior Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: It was this year's $15 million, and it was announced in Budget 2013, which was tabled late this year. Therefore, most departments did have enough time to get their Budget 2013 requests in these supplementary estimates. HRSD's $15 million as well as others will appear in Supplementary Estimates (B) in the fall.
Mr. Matthews: If you look to future years' Reports on Plans and Priorities for departments — not the current year, because the budget was late — you will likely see some descriptions.
The Chair: I have been trying to follow Senator Callbeck's questions by looking at Supplementary Estimates (A) that we are studying this morning. That is the reason for the question.
Mr. Matthews: To be clear, the money you are seeing in Supplementary Estimates (A) is money from a previous fiscal year that was unspent; it does not have anything to do with the Budget 2013 money.
Senator Callbeck: Okay, so that is coming in the next supplementary estimates.
Health Canada: $5 million for an advertising campaign. Will that be a campaign to promote a healthier lifestyle?
Mr. Matthews: It is related to the health and safety of Canadians, but I am not sure if Ms. Thornton has additional details on the actual program.
Ms. Thornton: I do not for the specific elements, but it brings awareness to Canadians of not just issues but also the tools available, either through Health Canada or on the Web. It encourages people to use the advisory tools and access this information for better decision making.
Senator Callbeck: It is really not geared at a better, healthier lifestyle.
Ms. Thornton: I think it may be; it tends to be a constant one, yes.
Senator Callbeck: Indirectly, maybe.
There is information I would like to get. I know you have not got it here, and maybe you would send it to the committee later. It is with regard to page 7 — the estimates 2012-13.
The Chair: Page 7 of the deck distributed this morning?
Senator Callbeck: Yes. I know that the transfer payments are a bit higher this year than last year. Could we have the breakdown as to what figures made up the $158 million last year and what will make up the $159 million?
Mr. Matthews: There is a breakdown in the Main Estimates already, but as we mentioned, the reason for the increase is really around the Canadian Health Transfer, as well as the increased Old Age Security payments and things like that. It is really a demographic story.
Senator Callbeck: Are there any decreases?
Ms. Santiago: Within the total amounts of changes?
Senator Callbeck: Right.
Ms. Santiago: There are a few.
Senator Callbeck: That is what I would like to know. Where are those decreases?
Ms. Santiago: In the major transfers or in any transfer?
Senator Callbeck: In the transfer payments.
Mr. Matthews: It would be easy for us to provide information on major transfers. However, to go through and pick up decreases, transfer payment by transfer payment, would be an onerous task. However, I think the major transfers may get at your question. We could undertake that.
Senator Callbeck: I am interested in transfer payments that have decreased this year from last year.
Mr. Matthews: I am not sure how we would get at that on a line-by-line basis. The major ones are already disclosed, but I am not sure how we get at the transfer payment by transfer payment question.
Senator Callbeck: I just thought you would have a figure for making up the 100 — a list.
Mr. Matthews: We can provide the major components. The major transfers make up the vast majority of that, so we can certainly do that.
Ms. Thornton: Part 1, page 7, shows the transfers to other levels of government and transfers to persons last year and this year. It clearly sets out which ones have been reduced.
Senator Callbeck: Where is that again?
Ms. Thornton: The Main Estimates, Part 1, page 7.
Ms. Santiago: We have it posted online, with all the transfer payments, item by item by department, showing year over year changes. It is the estimates to date from last year to Main Estimates, and it would have been posted with the 2013-14 Main Estimates.
Senator Callbeck: Alright. Thank you.
Senator Black: Good morning to you again and also to our special guests — welcome. The questions I have are to help me understand a couple of things at a pretty high level. Could you give me again, if you feel you have done it, why these Supplementary Estimates (A) are lower this year than in other years?
Mr. Matthews: There are two major reasons, though I will invite my colleagues to add to my explanation if they wish. The most recent budgets have been more in the line of restraint than new spending. It is the broad measure.
The other thing I would say is that we go to departments, and our preference is that they wait until Supplementary Estimates (B). If they can wait, we would rather they wait. We have discussions with the departments to ask if they need to come in now. It is very much directed; if they convince us that they cannot wait until Supplementary Estimates (B), we say come on in. This year, we had few of those.
Those are the two reasons to highlight.
Ms. Thornton: Again, I would like to reconfirm that we are seeing reductions in overall direct program spending, and I think we are beginning to see that here. However, this time in Supplementary Estimates (A), because we are not able to accommodate a bunch of the budget items in the budget — we just have one in these Supplementary Estimates (A) — we insisted that any organization that wanted to come in on Supplementary Estimates (A) provide a detailed cash flow, which we challenged. There had to be a reason for them to demonstrate need for the funds or the authorities, otherwise you would see them in (B).
Senator Black: That is very helpful. Thank you very much.
In respect of the Chalk River spending, is that something unusual? Is something unusual going on there with the isotopes? I would have thought in the normal course of events they would have spent money every year to make sure they do what needs to be done. Why this and why now?
Mr. Matthews: AECL has gone through a transformation in terms of privatizing some through a transfer to SNC- Lavalin. AECL has been a frequent client, customer — I do not know the right word — being included in Supplementary Estimates (A) because they have funding challenges for the ongoing work. They do not have a regular appropriation to cover off what they need to do. They are often included in Supplementary Estimates (A) because they do have a cash flow crunch.
Chalk River operations are ongoing. The government funds them. It was a Budget 2013 item to continue that funding. It is not a regularized funding that they have to meet their operations.
Ms. Thornton: It had to do with some of the timing with regards to the whole expenditure management system. The source of funds was not confirmed until Budget 2013, which is why it was not in the last year's reference levels. Isotope production is not unusual. It was the timing.
Senator Black: We would expect that in Supplementary Estimates (A) next year we will see this kind of number and request again?
Mr. Matthews: It is hard to say. AECL is going through some interesting changes. This is based on what they need to get through the current fiscal year. AECL has been called as witnesses.
Senator Black: I just wanted some colour. It struck me as, frankly, odd.
Mr. Matthews: They are the one example in these estimates related to Budget 2013. It is an urgent need for the organization.
The Chair: On that last point, just because we might have asked another government department to come before us, it does not mean that we would not ask you as well.
Mr. Matthews: Yes.
The Chair: Sometimes we get a different way of answering that helps us understand the issue more clearly.
Mr. Matthews: I am happy to answer.
Senator Black: In respect of the disaster funds, you have a different concept for it. Do I understand that if I am in Canmore, Alberta — I am focusing on the hometown here — where there are issues on rivers and they want to divert rivers to avoid disasters as opposed to cleanup for disasters, does this money allow for that? Is it simply that we had a problem, let us fix it?
Mr. Matthews: This money is related to cleanup of or reimbursement for disasters in the past. Other projects have been undertaken to be more preventative in nature. This is the reimbursement program.
Senator L. Smith: Mr. Matthews, you had an interesting comment on the specific claims settlements, "kind of lumpy.'' Could you clarify that?
Mr. Matthews: The money provided initially in Budget 2007 — I apologize if my language was awkward — was $2.5 billion over 10 years. From a profile perspective, we divided that up evenly, but on the notion of negotiating specific claims, they negotiate claims. Some years there are more settlements than fewer. We set aside an equal amount each year. However, we know that depending on the speed and size of negotiations, some years will be more than we set aside, some years are less. We come to Parliament to get them to move money around to fund whatever claims are being settled during the fiscal year. As long as they respect that overall cap, all is okay.
Senator L. Smith: How many claims would be settled by this money?
Mr. Matthews: They post the number of claims settled on their website. The last information I have is November 2012. I am going from memory. They had 99 claims under assessment already. There were 250 or so in negotiations. I cannot speak to how many claims have been settled. That is on their website. With 99 plus 250, you are looking at roughly 350 in the system currently, in November 2012.
Senator L. Smith: Is that the total number of claims outstanding?
Mr. Matthews: That we are aware of, specific claims. That was November 2012. I cannot speak to what has happened since then.
[Translation]
Senator Hervieux-Payette: Good morning, to you and your colleagues, Mr. Matthews. I was wondering about the description for the voted appropriations entitled "funding related to government advertising programs.'' You listed four departments. The Department of Canadian Heritage had $500,000, Health Canada had $5 million, Human Resources and Skills Development Canada had $2.5 million, and Natural Resources Canada had $12 million.
To find out the total amount spent on communications to date or allocated to government communications, all I have to do is look at that item for all the departments and add up the amounts. Would that give me the whole picture of government communications spending? Do all the departments report it in the same way?
[English]
Mr. Matthews: No. The best place to get a sense of total spending on advertising is Public Works and Government Services Canada. It posts spending on a government-wide basis. That is a website that looks backwards. It tells you what was actually spent.
The figures you are seeing today in Supplementary Estimates (A) are just the amounts of new funding that is going out to departments specifically for advertising. However, understand that departments could spend some of their own resources on advertising.
Here is some additional money allocated to them. To get the whole picture, the best place to go is the Public Works update, which shows you total spending across government by department. That gives you the complete picture.
[Translation]
Senator Hervieux-Payette: As for the biggest budgetary item, Natural Resource Canada's, I have a sneaking suspicion that the oil sands might come under that. Is it time-specific? Is it three months? Four months? If the amount was added, when could it be spent? When could it be decided that not enough funding had already been allocated to the department?
[English]
Mr. Matthews: This is a specific request, as you mentioned, for Natural Resources Canada. It is money that is planned to be spent during the current fiscal year. I do not have a breakdown of whether it is the next three months. However, I can tell you it is during the current fiscal year between April 1, 2013, and March 31, 2014. It is targeted at responsible resource development. That is the information I have on what that planned spending is.
[Translation]
Senator Hervieux-Payette: Does it represent the total for the year or part of the additional amount?
[English]
Mr. Matthews: Again, this is augmenting their existing budget. They could have additional funding in the budget that they have already set aside for advertising. This is a new request over and above what they might have already had.
[Translation]
Senator Hervieux-Payette: When I looked at your table showing all the government expenditures, a question came to mind. I wondered whether what you call "operating and capital'' expenditures included unemployment insurance. I mean employment insurance, rather, although it does do more for the unemployed than the employed.
Mr. Matthews: No.
Senator Hervieux-Payette: So that is separate. It is not included in that amount.
[English]
Mr. Matthews: No, employment insurance is a statutory program, statutory spending. Operating and capital is for the operations of a department, and capital would be things like new equipment, computers, cars, whatever. When you are dealing with Employment Insurance payments, it is outside of operating and capital.
[Translation]
Senator Hervieux-Payette: Which part of the chart does it appear in, then? It is not part of the transfer payments, the public debt or the operating and capital amounts, so where does it appear?
[English]
Mr. Matthews: No, EI would fall under transfer payments, if I recall correctly. I will just have my colleagues check. Can we come back to that?
[Translation]
Senator Hervieux-Payette: I think that is an important piece of information.
[English]
Ms. Santiago: The EI benefits themselves are paid as transfer payments. The administration of the Employment Insurance program is primarily part of Human Resources and Skills Development Canada, but it is also part of the Canada Revenue Agency. It is completely cost-recovered. It is charged to the EI account. It does not form part of the operating expenditures you see in this chart, but neither do the transfer payments. Those are reported separately from the $159 million that we have here.
Senator Hervieux-Payette: With the new measures, let us say you collect a certain amount of money and you put that in a separate account. If people are not collecting money, where does this money go? Does it stay in a specific account even though it is now part of the budget? In the past it was separated, but now it is part of the government budget.
Mr. Matthews: You are correct. However, when you look at the financial statements as well as the budget of the government, you will see very distinct lines for Employment Insurance revenues or premiums collected, and then the amounts paid out.
You can get a sense of whether the amounts paid out are roughly in line with what was collected or not. That is tracked separately for the very reason that you can get an appreciation of what came in and out.
Senator Hervieux-Payette: I wanted to know if we are in a surplus now or a deficit.
Mr. Matthews: I believe they disclosed that line separately in the budget, as well. If you are looking for a more up- to-date number, I believe the Department of Finance Canada's monthly Fiscal Monitor publication discloses Employment Insurance premiums that came in as well as payments that went out.
[Translation]
Senator Bellemare: I would like to pick up on what you said about budget reporting and the assessment. You mentioned the fact that the presentation could change, with the information appearing according to strategic objectives; the traditional breakdown with operating capital and transfer payments would no longer be used.
I think strategic objectives would be useful, but it is important to keep the historical definition of public spending, especially since the researchers, the economists and the whole gamut of people who go over the public expenditures with a fine-tooth comb need to be able to draw comparisons. I hope that will be maintained.
My question is about Supplementary Estimates (A). Do you have the breakdown between the transfers? Page 7 gives a general breakdown. Just to give us some sense here, could you tell us whether the supplementary estimates are more focused on the transfer payments or the operating and capital expenditures, in terms of the investments?
[English]
Mr. Matthews: Supplementary estimates would cover all three things, potentially. There is no restriction. Typically, in these cases, you would rarely see supplementary estimates that would impact public debt, but we sometimes get updated forecasts.
Typically, you would see supplementary estimates more focused on transfer payments and operating capital. However, there is no rule that says they cannot go elsewhere.
In terms of the idea of changing the vote structure, you have touched on a very important question. Your colleagues in the Standing Committee on Government Operations and Estimates have said, "Look, we think of departments in terms of program spending. We do not think in terms of capital, operating and grant contributions.''
If you think about the government structure, there is a hierarchy and it starts with strategic outcome. It cascades down into programs. There has been an ongoing discussion with that committee as they have received more and more information over the years about strategic outcome and programs about whether we should change the way we vote. Is capital operating, and grants and contributions really a smart way to vote?
However, you have hit the nail on the head, and the question becomes this: If you change, what do you do with things like operating capital and transfer payments? Do you keep that for information purposes? Is it really a flip of roles?
Right now, we vote on capital, operating and transfer payments, and then we provide for information purposes data on strategic outcome and programs. Are we really just talking about a change, where we vote on strategic outcome and programs, and for information purposes, you get information on transfer payments, operating and public debt?
When we talk to departments, those are the types of questions they ask. When we say, "We are thinking about this change. What are the impacts?'' Those are the types of questions they ask. Will they be required to track these things?
Any time we contemplate a major change, one risk is you lose the history. People will often want to compare the present to the future. What do we do about the history?
There is no commitment to change the model. It is up for discussion, but those issues are some of the issues we would have to wrestle with if we were to actually change the model.
[Translation]
Senator Bellemare: If you happen to be involved in that, perhaps you could underscore the importance of maintaining the history.
I have a specific question about VIA Rail. A total of $99 million appears in the supplementary estimates to offset the solvency shortfall with respect to its employee pension plans.
If we look at that amount in relation to the supplementary estimates, we know that the supplementary estimates flow from the government. VIA Rail, however, has its own revenues. So the $90 million out of VIA Rail's total budget may not be that significant.
Could you please explain that solvency shortfall? Do you have a sense of where it comes from? Why does it appear in Supplementary Estimates (A) instead of the Main Estimates?
[English]
Mr. Matthews: It is a little complicated, but I will do my best. VIA Rail is separate; it is a Crown corporation. From a financial management perspective, Crown corporations have to respect the laws related to pension solvency that the private sector would respect. You have to put so much cash by law into your pension accounts to ensure they are solvent.
A few things have happened with VIA. One, low interest rates have caused returns on investment, generally speaking, to be lower than what one had maybe originally forecast. Investments typically are not doing as well as they had in the past because of low interest rates.
The second bit is around demographics for VIA. They have an older workforce and are getting more and more draws on their pension. To respect the solvency rules around pensions, there is a payment needed in the short term to effectively respect those rules of $99 million. The authority to make that payment — the internal decision-making process — has now been satisfied. We are now in a position to transfer that money to VIA so they can make that payment.
The $99 million is based on the actuarial evaluations, investments and demographics. To give you a sense of magnitude, in the September 30, 2012, quarterly report, VIA reported a pension plan deficit of just under $300 million. That was the total deficit they were forecasting on September 30, 2012. The $99 million is related to that deficit.
Senator Gerstein: Mr. Matthews, I will follow up on Senator Bellemare's question. I know what it says, but I do not know what it means, so I need your help as well.
On page 1-5, it says: "This funding will allow VIA Rail Canada Inc. to make pension contributions to address the solvency of its pension plans.'' You have now outlined that is $300 million short, so I suspect this is not a one-time occurrence.
If I turn to 2-19, the wording changes. In 2-19, it does not talk about solvency; it talks about $99 million for "Funding for incremental pension requirements.''
I would assume that "incremental pension requirements'' is something different than funding solvency. Can you help me with that?
Mr. Matthews: I will try. It is the same.
Senator Gerstein: It is the same?
Mr. Matthews: It is the same. Perhaps we have not been as consistent in our wording, but the description at the front of the book provides more detail. The key point is the $99 million is required to meet the solvency rules, if I can say that, because you have to basically keep a certain amount of your pension liabilities funded.
Senator Gerstein: Absolutely.
Mr. Matthews: It is not 100 per cent that you need to have, but you do need to have a certain percentage funded. That is why we used the word "solvency.''
Senator Gerstein: Over what period of time is the $300 million deficit required to be brought on side? How much time do they have?
Mr. Matthews: They have all sorts of time. The $300 million was the last quarterly report I had seen.
Senator Gerstein: An actuarial evaluation, which I suspect they have to have every three years.
Mr. Matthews: Every three years. You have things like return on investments. Who knows what the future will be? I do not mean to be grim, but mortality rates factor in to this.
Senator Gerstein: Let me understand. They are $300 million short on the last actuarial analysis that was done of the VIA Rail pension?
Mr. Matthews: Their last quarterly report. I am not sure if it is tied to an actuarial evaluation or update, but there is a link.
Senator Gerstein: Once they are advised they are $300 million short, they must have a particular period of time to get it on side.
Mr. Matthews: Correct.
Senator Gerstein: Which is how long?
Mr. Matthews: I am not sure of the timelines. We can get back to you and find out.
Senator Gerstein: It would be helpful to the committee if we could find out a little more about the VIA pension plan, its actuarial position, when it will have another actuarial review and what we might anticipate coming down the road, or the track.
Mr. Matthews: It is difficult to project the future because there are —
Senator Gerstein: It always is.
Mr. Matthews: Okay.
The Chair: Do I understand correctly that this $99 million is part of the $300 million plus deficit?
Mr. Matthews: The $99 million would go towards reducing that deficit.
The Chair: Do you anticipate we will see other requests for extra funds in the future?
Mr. Matthews: It depends on their future assumptions and how accurate they are. It is often a case of retirement plans, inflation, investments, all sorts of variables. That is why the rules do not require you to fund 100 per cent of the deficit. You are not going to pay that out tomorrow. That will be paid out over an extended period of time.
There are rules around how much of that has to be funded. I am not clear on how much time you have to make up the difference.
Senator Gerstein: That would be helpful.
Mr. Matthews: We will do our best.
The Chair: I interpreted your comment to mean we should not all try to be actuaries by simply subtracting $99 million from $300 million. It will take an actuary to tell us.
Mr. Matthews: It will take an actuary to tell you what kind of shape the plan is in. It is an estimate future. Ms. Thornton reminded me that VIA's corporate plan and report does have additional information on the pension. That may do the trick. I am not certain.
Ms. Thornton: In addition, they monitor this one closely because just a small change in interest rates changes this forecast radically. They look at it quarterly, which is why you would not address the $300 million upfront at the moment it is addressed; you would watch it. They have both annual and quarterly reports to track on this.
The Chair: Are you satisfied, Senator Gerstein?
Senator Gerstein: I will look at the VIA report.
Mr. Matthews: Are we leaving it as the senator will look at the report and decide later if anything additional is required? Why do not we leave it at the report? We will see you again soon, I am sure. How is that?
Senator Buth: It is always a pleasure to have Treasury Board here because we all have so many questions. My first question is about transfer payments. I am looking at the summary estimates by strategic outcome and program. How would I know whom the transfer payments are going to, provinces, organizations, et cetera?
Mr. Matthews: To get an understanding of where payments go to, the best place to go is the Reports on Plans and Priorities. You get a description by each department of what their programs are. For some, it is easy to tell. The Canada Health Transfer goes to provinces. For others you have to delve into the programs to find out whether the recipients are NGOs, individuals, something else. RPPs is the best place to start.
Senator Buth: Thank you. In your presentation you provided some details in talking about AECL spending. Where would I find that information?
Mr. Matthews: The information I provided was a breakdown specifically to what this additional funding of $260 million relates to, and I am not clear if it is actually in the description of AECL's funds in here. That was additional detail.
Senator Buth: I could not find it.
Mr. Matthews: I am not sure where you would find that. AECL produces a corporate report and plans. The danger in looking at incremental spending — because this is additional resources — is that it only shows you one piece of the picture. It is probably better to look at AECL's corporate plan and understand what they are spending in total on Chalk River versus isotopes and other things. To see that we augmented their spending I do not think gets you the whole story.
Senator Buth: Thank you. The last question I have is on Agriculture Canada and the Business Risk Management piece. I understand the need to have an amount in Supplementary Estimates (A) for Growing Forward 2. I understand that is a negotiation with the provinces. However, Business Risk Management is an amount that is the responsibility of the department on its own. Why would they have an allocation or a request in Supplementary Estimates (A) for Business Risk Management?
Mr. Matthews: Growing Forward 2 has two pieces. The first piece is jointly managed by the federal government with provinces and territories. The second piece, which is Business Risk Management funded by the federal government, is part of Growing Forward 2 as well. That is an initiative which was renewed on April 1. It is both pieces. The Business Risk Management piece is funded 100 per cent by the federal government. It has a couple components, largely around protecting or normalizing income, putting in insurance mechanisms. AgriInvest, protecting farmers against income declines, is one example. AgriStability protects farmers against unforeseen low prices. AgriInsurance protects farmers against drought, flooding and disease. The final piece is AgriRisk, which is around getting the private sector to step up and develop some risk management tools.
The best example I can give you is a new livestock insurance program being run in the West that is actually run by the private sector not the government. Those pieces are all 100 per cent funded by the federal government. The other piece you mentioned is jointly managed with the federal government, provinces and territories. In that piece there is a lot of flexibility, depending upon the province. Their needs are different to put in place different mechanisms.
The Business Risk Management is part of Growing Forward 2. However, it is 100 per cent federally funded.
Senator Buth: The reason they have an amount in Supplementary Estimates (A) is because of the renegotiation?
Mr. Matthews: The renewal of the program.
Ms. Thornton: If you recall, in their Main Estimates they indicated that this was coming. They had begun, but they had not brought it to closure to have it in the Main Estimates. It was both in the Main Estimates highlights but also in the Reports on Plans and Priorities when they talked about this. It was under way, but it was finalized the in the negotiation and the steps to get it through supply.
[Translation]
Senator Chaput: My first question is really a supplementary question related to the questions Senator Hervieux- Payette asked about the advertising programs.
The funding related to government advertising programs appears sometimes under the item "information'' and other times under "professional and special services.'' Could advertising expenditures appear under any items besides those two?
[English]
Mr. Matthews: I would say not. What you are interested in is government spending on advertising. The best place is the website of Public Works. It has a comprehensive picture. That being said, what you have mentioned is a different slice of spending.
We provide spending on salaries, professional special services, so this is a hypothetical I am going to give you. If we hire an outside firm to develop an advertising program, it would show up under professional and special services.
If for some reason — and this is hypothetical, I want to stress — we decided with our own people to build our own advertising program and did not use outsiders, it would show up as part of payroll. We are using salaries to pay for it. You do need to understand the distinction between the two.
If you want to understand government spending on advertising, the Public Works website is the best place to look. The vast majority of our spending is on advertising, professional inspection services. I was giving you a hypothetical example to show you the difference.
[Translation]
Senator Chaput: Thank you. My other question pertains to the Department of Agriculture and Agri-Food and the cost-shared strategic initiatives programming. Are they new programs? Is the funding in addition to previously requested amounts, and what is the total cost?
[English]
Mr. Matthews: As I mentioned, Growing Forward 2 was renewed. The total package is $3 billion and there are two pieces to that. One is the federal-provincial shared piece, which is $2 billion. That includes the provinces' portion of that, and then there is $1 billion in programs specifically funded by the federal government. It is new in that there are some changes to the program, but Growing Forward has existed in the past.
What is different this time is in developing Growing Forward 2 there were extensive consultations with the provinces as well as the industry. One of the outcomes is these programs, which are jointly cost-shared by the federal government and provinces and territories but delivered by the provinces and territories, is that they have given additional flexibility to the provinces to figure out how to design that programming because the agriculture industry in Nova Scotia is very different from the agriculture industry in British Columbia. One of the outcomes is around giving flexibility to provinces in what they design and deliver.
I can tell you that the Yukon, British Columbia, Alberta, Saskatchewan, Manitoba and P.E.I. have all communicated details of their programs on their provincial websites. It is up to each provincial government to say what they are doing. I know that those jurisdictions have the details up on their websites, and I suspect the others will follow shortly. Because of the variability among provinces, the onus is on the provinces to share information about what they are doing with the spending.
Senator Chaput: That is a good thing.
What is the cost sharing on that $3 billion?
Mr. Matthews: The $1 billion on the agricultural risk, which we already talked about, is 100 per cent federal government. The balance of $2 billion is split 60 per cent by the federal government and 40 per cent by the provinces and territories over five years.
Senator Wells: Thank you for your responses and assistance thus far. My question is about the Department of Indian Affairs and Northern Development and $167 million for specific claims settlements. Is that $167 million part of the regular claims process, or is that making up for decisions that the government has made outside of their treaty obligations?
Mr. Matthews: We are aware of the specific claims process. They are obligations under historic treaties. As I mentioned, Budget 2007 did set aside a certain block of money to negotiate those claims. They are part of the planned process. They are claims we have been aware of, but specific claims. The details on the settled claims, as we mentioned, are on the website.
Ms. Thornton: None of this is unusual or new or different. It is what had been planned originally through the Justice At Last initiative.
Senator Wells: It is fulfillment of our treaty obligations.
Ms. Thornton: Yes.
Senator Callbeck: On page 7 of the brochure you passed out, you are comparing 2012-13 estimates and 2013-14. Now, 2013-14 say you have included Supplementary Estimates (A), so does 2012-13 have the supplementary estimates included?
Mr. Matthews: They have (A), (B) and (C). We will update this chart again as we go forward, but keep an eye on it. We are early in March.
Ms. Santiago: I wish to apologize to Senator Hervieux-Payette. I had misread one of my tables. Employment Insurance benefits are in fact included in the $160 billion on that slide, so $19 billion of the $160 billion are benefits under Employment Insurance. The total cost of EI is in fact included on that slide.
Senator Gerstein: Mr. Matthews, could you clarify for me on page 2-11, industry, where we see operating expenditures being reduced by $2.6 million and capital expenditures going up $3.1 million, is that a reprofiling of loans from operating to capital that we have discussed on so many occasions?
Mr. Matthews: This is not a reprofile; this is a transfer. I believe that is what we are looking at here if I am reading this properly.
Senator Gerstein: This is not a reprofiling, so they are not moving the money from operating to capital?
Mr. Matthews: I am sorry, they are moving some money. Reprofiling is something different. I apologize.
Ms. Santiago: They are in fact transferring funds from capital to operating to address a deficiency.
Senator Gerstein: Thank you.
The Chair: We decided not to call that reprofiling.
Mr. Matthews: Reprofiling typically — and I should be careful with that word — is when we talk about money that was initially going to be spent in one year and is spent in a different year. It is more by way of explanation. Vote transfers actually formally show up in estimates.
Ms. Thornton: Typically, when it is "in year'' we talk about a reallocation, and a reprofile is between years. That is our issue.
The Chair: I thank the Treasury Board of Canada Secretariat very much for these points of clarification again. It is always a pleasure to have you before us, and I know you are diligently working on Supplementary Estimates (B). If we do not see you before that, we will see you then.
Honourable senators, I mentioned earlier that we would be having representatives of the Global Organization of Parliamentarians Against Corruption, and that delegation has arrived. I will briefly introduce them: Members of Parliament Volda Lawrence, Manzoor Nadir, Bibi Shadick and Trevor Williams. They are accompanied by Committee Clerk Sonia Maxwell and the Canadian High Commissioner to Guyana, Carleen Langford. The Strategic Advisor for GOPAC is Geoff Dubrow, and he is here as well. There is one researcher, Waleed Rushdi Kadray.
Thank you for being here and learning about our process. You are learning as we are learning. We ask these questions so we can understand the process.
I am pleased to introduce another panel. In our second hour, we will hear from Atomic Energy of Canada Limited: Steve Halpenny, Vice President, Finance and Chief Financial Officer; and Jonathan Lundy, Vice President, Chief Legal Officer. From Public Safety Canada, we have Gary Robertson, Chief Financial Officer and Assistant Deputy Minister, Corporate Management Branch; and Dave Neville, Senior Director, Financial Assistance Programs.
Thank you for being here. Each of you has introductory remarks, so please go ahead.
Steve Halpenny, Vice President, Finance, and Chief Financial Officer, Atomic Energy of Canada Limited: Thank you, Mr. Chair. I am pleased to be here with my colleague Jonathan Lundy, Vice President, Chief Legal Officer of AECL. I will begin by providing the committee with some background on AECL. AECL is Canada's premier nuclear science and technology organization, a strategic element of Canada's national science and technology infrastructure as well as a national innovation system.
Canada is involved in virtually every aspect of the nuclear industry, from uranium mining and processing to the construction of and operation of nuclear power plants to decommissioning and waste management. As a Crown corporation, AECL contributes to Canada's knowledge advantage, positioning the nuclear industry for success domestically and internationally. It has unique capabilities in working with radioactive materials that have application in fields important to governments and the nuclear sector. The AECL's public policy roles include conducting nuclear R&D, producing medical isotopes and managing legacy and historic nuclear waste.
Atomic Energy of Canada Limited has eight locations in four provinces: Ontario, Manitoba, Quebec and New Brunswick. The largest AECL site is located at Chalk River, two hours west of Ottawa. Chalk River Labs there comprise the single largest science and technology complex in Canada, operating 17 nuclear facilities and employing almost 3,000 highly trained staff.
With respect to the ongoing Atomic Energy of Canada Limited restructuring, the government has completed phase 1, which entailed the sale of the CANDU Reactor Division. Last February, the Minister of Natural Resources announced phase 2 of restructuring, focused on nuclear laboratories. Minister Oliver announced that in the future the nuclear labs will be managed by the private sector through a government-owned, contractor-operated management model, known as a GOCO. The government is not selling the nuclear laboratories; the assets and liabilities will remain with the Government of Canada.
This management model has been implemented successfully in the U.S. and in Britain. The Government of Canada fully intends to build on the successful, proven nuclear GOCO track record in these jurisdictions.
Procurement of the AECL GOCO contract will be a competitive process, overseen by Public Works and Government Services Canada, with full implementation expected in the 2016 time frame. The initial GOCO contract is envisaged to have a term of about 10 years.
Once the second phase of restructuring is complete, AECL will have three mandates with a possibility of a fourth. First, the labs will continue to support the government in addressing its nuclear legacy and historic waste liabilities, including the Nuclear Legacy Liabilities Program. The best practices of the private sector GOCO contractor will strengthen Canada's capabilities in all aspects of nuclear decommissioning and waste management.
Second, the laboratories will provide nuclear science and technology capability to federal departments to help them fulfill their mandates related to nuclear safety, security, public health and the environment. AECL will continue to fulfill its role as an adviser to and agent of the government for public policy purposes, but we will do so with a stronger customer-supplier relationship with federal departments.
Third, the nuclear laboratories will continue to support, on a commercial basis, the nuclear industry's need for R&D, testing and evaluation. This will include the development and validation of technologies. Access to the laboratories by CANDU reactor owners, CANDU energy, and the nuclear supply chain will be sustained.
The minister's announcement also indicated that there is a potential fourth mandate linked to the AECL restructuring exercise. Specifically, the government will examine the value to Canada of investing in longer-term nuclear innovation. The government will assess the potential business case for a forward-looking, industry-driven, cost-shared nuclear innovation agenda. It will also be seeking independent advice from experts.
Mr. Chair, it is in this context that the government's funding is funding the activities of AECL. Let me address the Supplementary Estimates (A) as they relate to AECL. You will note the amount of $260.3 million to meet operational requirements at Chalk River Laboratories. This funding will allow AECL to continue medical isotope production; complete infrastructure and operational upgrades related to health, safety, security and environmental priorities; and meet regulatory requirements.
In terms of the value to Canadians, let me provide a few examples. AECL leads the national effort to clean up and safely manage historic nuclear waste and leads the cleanup of low-level radioactivity in the Port Hope area. AECL is working on new fuels to power reactors of the future and is collaborating with government partners on technologies to detect and defeat nuclear threats at our borders.
AECL is working with nuclear power utilities to extend the life of their reactors. AECL is producing medical isotopes to detect and treat major diseases and is conducting neutron-based research in the area of new materials science. AECL is transferring technology from the lab to private sector in order to commercialize products and create jobs, as well as to develop a new generation of scientists and engineers through collaborative R&D with universities.
Consistent with government direction, AECL will live within its means. We will ensure prudent management of public funds by reducing risk and financial exposure for taxpayers while driving results for Canadians. AECL will reduce its operating funding requirements, and we are on track to meet funding reduction targets.
Thank you, Mr. Chair. We would be pleased to take questions.
The Chair: Thank you very much. Now we will go to Public Safety Canada.
[Translation]
Gary Robertson, Chief Financial Officer and Assistant Deputy Minister, Corporate Management Branch, Public Safety Canada: Honourable senators, I am very pleased to appear before you today to discuss the 2013-14 Supplementary Estimates (A) for Public Safety Canada.
[English]
Accompanying me today is Dave Neville, Senior Director of the Financial Assistance Programs, who is responsible for the Disaster Financial Assistance Arrangements, the DFAA program, which will be the subject of our discussion today.
[Translation]
To date, Public Safety Canada has requested authorities of $440.9 million in the main estimates.
[English]
This represents a net increase of $8.2 million, or 1.9 per cent. In the 2013-14 supplementary estimates, Public Safety Canada has requested $230 million to increase its grant and contributions vote to fulfill the Government of Canada's priority commitments to provinces and territories. This represents a 52.1 per cent increase to the authorities requested through the 2013-14 Main Estimates and a 76.5 per cent increase to the grants and contributions vote.
Since the inception of the DFAA in 1970, the Government of Canada has paid out more than $2.3 billion in post- disaster assistance to help provinces and territories with the cost of response and of returning infrastructure and personal property to pre-disaster conditions.
[Translation]
As you are well aware, honourable senators, the frequency and magnitude of natural disasters has been steadily increasing in recent years.
[English]
For example, in 2010, 21 incidents were deemed eligible for cost sharing under the DFAA, which is three times the average annual number incurred over the previous period. These and other significant events have increased the Government of Canada's obligations under the DFAA to $1.1 billion.
However, Public Safety Canada's annual allocation of $100 million for DFAA is insufficient to meet these obligations. The department was granted additional authorities of $180 million in the last fiscal year through Supplementary Estimates (B) and is currently seeking the $230 million referenced in Supplementary Estimates (A). The department will also be requesting a further $470 million in Main Estimates, in the next three years, in support of these obligations. When approved, these authorities will ensure that Public Safety Canada has sufficient multi-year funding in place to meet all of the Government of Canada's commitments related to these past events.
Honourable senators, it should be noted that the department will be required to seek additional authorities from Parliament for any events that have yet to occur and that are deemed eligible under this program.
In recognition of the rising cost of disaster response and recovery, the department has also redoubled its commitment to investments in disaster mitigation, and, to this end, Public Safety Canada has engaged provinces and territories on the development of a national disaster mitigation program, as well as enhancements to ensure the sustainability of the DFAA program.
It is anticipated that a national mitigation program could lessen the impacts of disasters on vulnerable communities while containing future costs related to disaster and recovery.
Once again, I thank you, honourable senators, for your time, and I would now be pleased to answer any questions that you have.
[Translation]
Senator Hervieux-Payette: I have to say that I have been one of AECL's admirers for a number of years.
I have two questions. First of all, do the amounts include the work done at Point Lepreau or has it been completed? Where do things stand? Could you give us an update on the nuclear facility, which was the focus of innovation efforts with the refurbishment of a reactor? Were any amounts allocated in that budget or paid out of it?
[English]
Jonathan Lundy, Vice President, Chief Legal Officer, Atomic Energy of Canada Limited: There are two parts to your question. First, the project has been completed. We are now in what is called the warranty period, a three-year warranty period. As it relates to the funding, I will defer to my colleague.
[Translation]
Senator Hervieux-Payette: If I understand correctly, then, it is currently in operation and producing electricity. Is that correct?
[English]
Mr. Lundy: Yes, it is connected to the grid and producing electricity.
Mr. Halpenny: In terms of the funding, as part of the divestiture of the CANDU commercial business, funding has been provided to wrap up retained liabilities. That includes contributions toward the development of the enhanced CANDU 6 reactor, but, most importantly, as just mentioned, funds have been set aside, for the warranty period, for three now-operating refurbished nuclear power plants, which will only be used if the warranty issues come up. Ample funding has been provided. It is done on a statutory basis, and, each year, it is included as part of the Main Estimates.
[Translation]
Senator Hervieux-Payette: Under the new management model, GOCO — I am not sure what the term for that would be in French — are you joining forces with the private sector to commercialize the CANDU reactor with its improved formula, given that Point Lepreau did produce technological innovations, after all? Are you actively pursuing international contracts, with China and other places in the world in need of nuclear reactors?
[English]
Mr. Halpenny: In terms of the actual GOCO model, it is a very defined, formal process that is currently under way. It is being led by NRCan and, as I noted, Public Works and Government Services. Within that framework, there is certainly involvement by private industry. There are specific timelines and engagement points with private industry, and those types of details will fall out of that whole process.
I do not have any more specific details as to the engagement of the utilities. However, again, it is a going out to private industry, and they are part of that private industry sector.
[Translation]
Senator Hervieux-Payette: You have a commercialization budget, do you not?
[English]
Do you have a marketing budget? This is a big undertaking.
Mr. Lundy: It is important to remember that we sold the CANDU Reactor Division, which is the vendor of nuclear plants and commercial services. The marketing expense would be their marketing expense as they try to build their revenue base. They are a private company. AECL, of course, is there to support and enable that private company, but CANDU Energy will be the ones facing the market.
Senator Hervieux-Payette: When this partial privatization happened, one of the main concerns was who the best champion, salesman or saleswoman was to go on the international scene. We were always under the impression that the country, not the private company, had the main salespeople. The private company would build and, of course, deliver the plant, but, in fact, it is a government-to-government initiative. I have some concerns. You mean that the government does not participate and move forward to make the sales?
Mr. Lundy: If CANDU Energy called upon us, we would assist them as much as possible because that could drive supplemental revenues through to us. As it relates to other government departments, I am sure there is work, but it is sort of beyond the knowledge that we have. I think it would be better served by other government departments. AECL is very supportive of CANDU Energy, and we hope they thrive.
[Translation]
Senator Hervieux-Payette: I have a quick question for Public Safety Canada. Does the $230 million involve the costs approved by the federal government for disasters that already occurred?
[English]
Mr. Robertson: Yes. In fact, they are payments toward approximately 22 different events that have happened in history, starting, I think, around 2005. About 13 of those would be final payments.
[Translation]
Senator Hervieux-Payette: My understanding is that your annual base budget is $100 million to cover disasters that occur, and in the event of additional disasters, you want to receive supplementary funds. Is that correct?
[English]
Mr. Robertson: Yes. In fact, our base budget is $100 million every year, but we have found that the number of events has become much more significant than historically. As a result, there are much more significant payouts, which the $100 million will not cover, and Treasury Board has provided us with the mechanism to go back for supplementary funds when required.
[Translation]
Senator Hervieux-Payette: I would like to make a brief comment, if I may, Mr. Chair. Since 1970, the figure is $2.3 billion. We are comparing apples, oranges and what have you, because I do not think your $2.3 billion factors inflation into the remediation and compensation costs, if we look at 1970, 1980 and 1990. Inflation was extremely high in some years. So if we looked at it in terms of actual cost, I think the bill would be much higher than $2.3 billion. However, it would be a different story if you had done the conversion every year and were able to say that, since 1970, over the past 43 years, you had spent $2.3 billion. That strikes me as a pretty paltry amount given how serious the disasters have been over the years. Just take the tremendous flooding that occurred in Manitoba, for example.
I would simply advise you that, in future, you will have to give us the figure that represents the actual spending. This today gives us a very limited idea of the real picture, and I think Canadians spent a lot more than this. Do you agree?
[English]
Mr. Robertson: I do agree with you that it is not a net present value of historical payments. It is a straight math addition of the previous payments, so you are exactly right on that. In terms of the increasing cost or severity of events, certainly there are more, and they seem to be costing more. That is why even though we have only paid out — "only'' is kind of a joke — $2.3 billion, a significant amount of money, we have about $1.1 billion still on our books. There is a material amount that the Canadian government has yet to pay out.
[Translation]
Senator Hervieux-Payette: For next year, then, please do not come back to us with that figure. Thank you.
[English]
Senator Wells: Thank you for your presentation. I have a question for Mr. Halpenny and Mr. Lundy. Is the relationship between AECL and the regulator a close one? You are an operator. Are you more than an operator?
I see you are also an adviser to the government. Can you talk about the relationship between AECL and the regulator?
Mr. Halpenny: I will start with AECL being regulated. We had our licence renewed until 2016. Our involvement with CNSC is basically to take their requirements for re-licensing. We get regular updates provided to them. We do follow making improvements, continually looking at what has been part of the site licence conditions and fulfilling those obligations.
As an operator, there is a relationship there, but a healthy one where it respects that idea of independence.
Senator Wells: Are the regulations prescriptive or goal oriented?
Mr. Halpenny: Very prescriptive, but with a stretch target, meeting the minimum requirements given, but AECL is trying to exceed those requirements where possible.
[Translation]
Senator Mockler: I have a follow-up question to the one Senator Hervieux-Payette asked about Point Lepreau.
[English]
I believe it is the first time we were retrofitting a CANDU operation. Am I right on that?
Mr. Lundy: Yes, we did three at the same time. We did Point Lepreau, Wolsong and Bruce Power virtually around the same time.
Senator Mockler: With the experience we have had at the three — and I will talk about Point Lepreau because it is in operation — are we putting Canada in a better place to transfer the technology for retrofitting CANDUs in the world?
Mr. Lundy: When we sold the commercial reactor division, a technology went with it to CANDU Energy, a Canadian company. You are right. There were many lessons learned on all three reactors. One in Korea and two in Canada are up and operational now.
It is a technology feat to be proud of. That technology and know-how has been transferred to CANDU Energy. I hope and suspect that they will do very well with that technology, as other reactors of the CANDU fleet need to be refurbished over time.
The Chair: Have all the outstanding court cases been settled in relation to Point Lepreau? We read so much about it in the public press.
Mr. Lundy: We do not have any litigation right now with New Brunswick. We are concentrating on ensuring the reactor is up and operational. We have a contract with them, and we have honoured and are intent to continue to honour our contract with them.
The Chair: They are satisfied that everything is fine? Are there outstanding claims? Perhaps not in the form of a statement of claim, but are there still negotiations going on?
Mr. Lundy: What I can say is we have a contract, and we are honouring it. We have no formal claim against us other than what I would call the normal operational warranty-type issues back and forth.
Senator Black: My first questions are to our friends from AECL. My question is of a legal nature.
When the second phase of the privatization is complete, what assurance can you give us that the structure will allow or ensure that any policy direction that the Government of Canada may want to provide in terms of the operations of AECL will be able to be implemented?
Mr. Lundy: It is important to remember that this is a Natural Resources Canada and Public Works initiative, and AECL is in the supportive role. During this stage, it will be led, definitely, by Natural Resources Canada and Public Works in order to fulfill the mandate the minister has set out.
AECL is really riding shotgun to a certain extent. We are advising and supporting, but it should be very clear that this is not an AECL initiative; this is a Natural Resources Canada initiative.
Senator Black: That does not answer the question. Let us take the model of the hotel industry. It is common now in the hotel industry for an entity to own the building but a company to operate the hotel.
Do I understand in this model that we, the Government of Canada, through you, will continue to own the assets but a third party will run the assets along these three or four objectives that are outlined here?
Mr. Halpenny: That is correct. Remember this is in the phase of development right now, but I believe — and probably stretching into where NRCan should be the one answering the question — the oversight will be by AECL, or the government will have oversight of the contract that will be let to manage the assets.
Senator Black: I see. The ability or protection that the Government of Canada would require to ensure that its interests were implemented by the contractor is still a subject of discussion and negotiation, you are saying?
Mr. Lundy: It is under development. I want people to understand this is fairly tried-and-true in the United States, and in the U.K. they have a tremendous amount of experience in moving towards this model. Lessons learned are certainly being —
There is a dialogue between the two of those options.
Senator Black: Do I understand in terms of cancer treatment that isotopes are a critical element of that? Radiation treatment?
Mr. Halpenny: Absolutely. Part of our Supplementary Estimates (A) is the ongoing support for the medical isotopes we produce out of Chalk River.
Senator Black: Do I understand that the only provider of isotopes or cancer treatment in Canada would be your facility at Chalk River?
Mr. Halpenny: Within Canada yes, at this point in time.
Senator Black: Under the new model proposed here, who will have control and direction of the development and supply of the isotopes?
Mr. Lundy: As it relates to the isotopes strategy, it is not an AECL strategy. That is a Government of Canada strategy. We are not the people to answer that question.
Senator Black: Spoken like a lawyer. I am a lawyer, so I understand.
Mr. Halpenny: That is why I asked my lawyer for an estimate.
Senator Black: I hear you tell me we should be asking another source. We must ensure that cancer treatment in Canada has the requirements that are needed to treat Canadians. You are saying I should be asking somebody else that.
Mr. Lundy: I think so. That is a universal comment we would share.
Senator Callbeck: Thank you for your presentations.
My question is on Public Safety. You are asking for $230 million, which I understand is going to be allocated to situations where the disasters have already happened. It takes a while for the provinces to get the figures together and submit them. What is your oldest outstanding claim?
Dave Neville, Senior Director, Financial Assistance Programs, Public Safety Canada: We have one dating back to 2003, Hurricane Juan in Nova Scotia. In 2008, we revised the guidelines under the DFAA. There is now a time limit by which provinces have to submit that final request for payment. It is a five-year limit. For any event that happened post- 2008, they have five years to get that in.
Senator Callbeck: That was a question I was getting at. Five years. How is it determined how much money the province will get?
Mr. Neville: We have a set of established eligibility criteria and a cost-sharing formula. When a disaster happens, it is the province that is responsible for the design and delivery of financial assistance to those who are directly affected. After the fact, we reimburse the province based on eligible expenditures and in accordance with the cost-sharing formula. The province submits its final bills to us; we audit, and then we determine the federal share of those expenditures.
Senator Callbeck: What is the cost-sharing agreement?
Mr. Neville: It is a sliding-scale formula whereby it is based on a per capita threshold. The first dollar per capita is a provincial responsibility. If I were to compare P.E.I., for instance, with a population of 145,000 people, then $145,000 would be the threshold. You can compare that to Ontario with 14 million people, the threshold would have to exceed $14 million before the federal government would kick in through the DFAA. Then it is a sliding-scale formula going from there. The larger the disaster the larger the federal share, and it goes up as high as 90 per cent dollars for the really big events.
Senator Callbeck: Did you say 90 per cent?
Mr. Neville: Yes.
The Chair: Is it the federal government or the individual province that would determine who was eligible in terms of cottage owners versus primary residences?
Mr. Neville: It is always the province that decides what is eligible under its provincial assistance program. We then assess the expenditures they submit to us based on the federal criteria. Provinces can be as generous as they see fit. The DFAA do not restrict financial assistance. In your example of cottages, if a province decides to pay that, they are well within their right. When we get into actually determining what the federal share will be, we would exclude any expenditure related to cottages for federal assistance.
The Chair: Is that out of the federal share?
Mr. Neville: That is right. It is principal place of residence only under the federal guidelines.
[Translation]
Senator Bellemare: More or less, along the same lines, I would like some details on the financial assistance regarding the 1970 agreement. I think you pretty well exhausted the topic.
But is the funding from the federal government transferred to the provincial governments? Individuals do not receive any cheques, everything goes to the provinces. Is it accounted for in that column?
Mr. Robertson: Yes, that is true.
[English]
Senator Buth: My question is for Public Safety Canada. Who decides something is a disaster?
Mr. Robertson: Basically there is an OIC process where it is determined by the Governor-in-Council based on the recommendations of the Minister of Public Safety. At the point that the OIC is signed it is officially a public disaster of federal relevance.
Senator Buth: Would the provinces essentially approach the federal government in terms of declaring something a disaster? What kind of guidelines are there?
Mr. Neville: There is a definition of what an eligible disaster is in the guidelines, and our focus is on natural disasters.
When a province feels they have experienced a natural disaster and their eligible expenditures in their view will exceed that $1 per capita threshold, they would write to the Minister of Public Safety requesting assistance under the DFAA. As Mr. Robertson mentioned, under our Emergency Management Act there is a requirement to go forward with an order-in-council that declares the event to be of concern to the federal government. That is our legal trigger to then provide authorized provision of financial assistance under the DFAA.
Senator Buth: Has that changed over the years? You commented on the fact that there is a general understanding that the number of disasters has increased. Have the guidelines changed over the years or the definition of a disaster changed?
Mr. Neville: Yes, in consultation with provinces and territories, we went through an extensive consultation between 2000 and 2006 and implemented new guidelines in 2008. It included everything from putting a box around the type of disaster that would be eligible under the program and specifically natural disasters. It was open-ended prior to that. We also refined other eligibility criteria and put in timelines like we mentioned before for submission of final claims. Again, that was all in consultation with the provinces and territories.
Senator Gerstein: Mr. Halpenny, I will start by saying I am not a lawyer, but I am going to pursue Senator Black's question. As I recall, several years ago Chalk River had a problem producing medical isotopes. Is that correct?
Mr. Halpenny: Yes, it is.
Senator Gerstein: As I recall, the reactors were shut down and Canada was importing medical isotopes in order to look after the medical needs of Canadians.
Mr. Halpenny: That is right.
Senator Gerstein: In your comments today, you indicated that when you receive the $260 million the funding will allow AECL to continue medical isotope production.
Is Chalk River currently producing isotopes? My recollection is that at one point Canada stood very high in the globe in terms of producing isotopes. It was actually a net exporter. Today, is Canada a net exporter or is it an importer of medical isotopes to look after Canadians?
Mr. Halpenny: It is a net exporter. It is certainly producing isotopes, to answer the first part of the question. The second part is that this past year we have met greater than 90 per cent of our commitments on the market.
We process it to Nordion, and Nordion does the processing. We produce the raw material; Nordion does the processing and sends it out to the markets. There is a structure that provides and ensures that Canadians receive isotopes, and residuals are obviously passed on to the international community.
Senator Gerstein: I am delighted to hear it; thank you very much.
Senator Black: I have a question for our friends at Public Safety, if I may. You talk about the development of a national disaster mitigation program. Can you update us as to where that is at?
Mr. Robertson: The original temporary three-year program is in its second year. The way it was structured originally it was focused about $99.2 million based on the experiences of the 2011 period.
Originally, the profile of the money was about $50 million, $38 million in this particular year and about $10 million in the final third year. Because of the timing, we found we ended up transferring only $10 million in the first year. We will be looking to Treasury Board to reprofile the $40 million from the first year into the third. Basically it transposes the relationship. Instead of 50-38-10, it will be 10-38-50. We are in the second year of that and it is going well.
Senator Black: I do not think I have understood what you just told me. Let me try and put it back.
You are saying to me you are creating a pool of funds that provinces can access, in conjunction with you, to try to prevent national disasters, such as cut fire walls through forests or divert streams or something; is that correct?
Mr. Robertson: I will be more precise. The original program was for three years for a particular reason. The government is contemplating a permanent program. Discussions are only just beginning on what that might look like.
We are unsure right now as to what that would look like. However, we are sure that if the government were to proceed it would be structured in such a way that it would make both programs more sustainable.
Senator Black: It is a work-in-progress then.
Mr. Robertson: Yes, it is.
[Translation]
Senator Hervieux-Payette: I would like to pick up on your annual expenditures for prevention and training. Did you decrease or increase the resources to see the program through? Do you have teams who go to the site, or is it all done in writing, in the sense that you have already signed an agreement with the province and you do not send people there to check the scale of the damage?
In cases where an event is always occurring — and here, I am thinking of Manitoba, which eventually decided to build dikes — are there other projects that your unit cannot pay for every year, projects for which you ask the government to carry out the work?
Do you have preparedness teams to reduce the risks and others who assess the disaster and produce reports so you can negotiate with the provinces?
[English]
Mr. Robertson: The way the program is structured, it is reactive in its posture. When an event happens, the province manages the situation, and the federal government compensates them within the formula that Mr. Neville explained. As we indicated, we are looking at a preventive program that would be permanent in nature. To do that, we need to have more meaningful consultations with the provinces and territories. We foresee that happening in the near future.
[Translation]
Senator Hervieux-Payette: I recall quite the event we had in Quebec in 1998, the infamous ice storm. Did your unit or the Canadian Forces assume the cost of the military deployment in that case?
[English]
Mr. Robertson: My understanding is that it was paid by National Defence — the physical deployment on the ground of federal workers or representatives.
Mr. Neville: That is the way it normally works. DND has the option of billing the province. If that were the case, the province could include that as an eligible expense under the DFAA. In situations like the ice storm or flooding in Manitoba, DND waived those costs to the province. No bill was sent to the province for the deployment of the forces.
[Translation]
Senator Hervieux-Payette: Is that similar to the way it works in the United States? There, we see the federal government getting involved; we saw it with the disasters in New York and, more recently, with the hurricanes. Is our model similar to that of our neighbour down south, even though we have fewer events?
[English]
Mr. Neville: Our structure is always from the bottom up. If an event becomes overwhelming for a province, the federal government wades in only when requested to do so by the province. If the request is for military assistance or financial assistance under the DFAA, we are poised and ready to assist as required.
I want to comment with regard to your previous question. Public Safety has a regional presence in all provinces. They work closely with provincial counterparts when an event happens in a province. We have the eyes and ears of Public Safety employees on the ground to assist us with the assessment of damage and any help we can provide to the province following an event.
Senator Hervieux-Payette: Is that part of the $100 million yearly budget that you start with?
Mr. Neville: The $100 million is strictly payouts to the provinces. It does not include personnel salaries incurred as a result of our regional presence. Those are permanent Public Safety employees.
Senator Hervieux-Payette: What is the budget for the salaries?
Mr. Robertson: The budget is in vote 1 in the Main Estimates.
Senator L. Smith: You have gone through some major changes at AECL: new partners in terms of restructuring; the sale of the CANDU Reactor Division; and the government-owned, contractor-operated, GOCO, management model. Is that a facilities management model? How is the transition going, including the relationships and the performance? What are you expecting from all this, and who oversees the resumption of the success or failure of this transition?
Mr. Halpenny: Yes, the divestiture is over, which was one larger phase; and we have retained the liabilities, which we are working away at. It provided an opportunity to continue our relationship with CANDU Energy Inc. Our focus is working with that relationship to provide services as they require for work in the marketplace.
The second, larger element we talked about today was the GOCO model and putting that in place with a target date of 2016. The oversight is extensive, and appropriately so. It is the key next phase of restructuring.
As a Crown corporation, certainly we have a board, an audit committee and a human resources and governance committee that provides oversight. With NRCan as lead, there are many steering committees at different levels of the organization that we are engaged with at AECL, right down to the working level. We have many teams working on many different facets of the restructuring to ensure that all the issues that come up are properly identified, resolved and escalated accordingly.
Senator L. Smith: Where are you in the process? Are you satisfied with what you have accomplished to date?
Mr. Halpenny: Yes, we are very much satisfied in terms of a formal framework plan in place with that oversight driven by results. Obviously, it is a tight schedule but meets the requirements to date.
Senator L. Smith: Is there a significant challenge that you have yet to meet?
Mr. Halpenny: None that I am aware of.
[Translation]
Senator Bellemare: Many international organizations today talk a lot about climate change, and how it can jeopardize various economies, migratory patterns and so forth. In light of that, can your proactive program be looked upon as somewhat of a preliminary approach as far as addressing climate change goes? Or do other government departments study the strategies needed to adapt to climate change? Is that part of your responsibility?
[English]
Mr. Robertson: Managing climate change is not a Public Safety responsibility. Our responsibility is when it is appropriate to step in and mitigate the implications of any kind of adverse weather.
Senator Wells: For clarity on what a disaster is, is it based on a dollar amount per population? Is there some other metric?
Mr. Robertson: As Mr. Neville pointed out, they are natural disasters. That is the focus. The scale or threshold for payouts is based on the population of a particular jurisdiction.
What might be seen as a legitimate natural disaster in P.E.I. with a much smaller population would not meet the threshold in Ontario. Ontario would not call us or contact us.
Senator Wells: I understand. How often does your agency decline to contribute when there is a request? I assume that initially the cost of the natural disaster would not be known.
Mr. Robertson: We do an estimate with the support of our jurisdictional partners. The OIC moves through the process based on that estimate. It is conceivable and likely that there will be variations on the estimate. Some will be higher and some lower. Like anything of this nature, the estimates are key.
Mr. Neville: Absolutely. We encourage provinces to get their request in as quickly as possible. We recognize that it is an estimate only, but when they feel that the eligible cost has exceeded $1 per threshold, we encourage them to get it in so we can involve the federal players, such as auditors and regional officers, in the event as quickly as possible.
In a worst-case scenario, after the audit determining that the threshold was not met, we would close the file. Such instances are few and far between. The provinces are pretty well versed in what will qualify under the DFAA.
Senator Wells: That would count as well for natural disasters that cross provincial borders. Would you deal with them as separate provincial disasters?
Mr. Neville: That is correct. Each province has to meet the threshold to qualify. The ice storm hit three different provinces, Quebec, New Brunswick and Ontario. We dealt with them separately.
The Chair: For AECL, you are looking for $260 million. That is described as funding to meet operational requirements at Chalk River. You have said that the laboratories at Chalk River are hoping to go into a new arrangement. Is any part of $260 million to deal with the cost of the new arrangement?
Mr. Halpenny: No, it is not. That is strictly for funding for the current year to meet our ongoing operational requirements.
The Chair: Is the proposed change to have it government-owned and contractor-operated something that we would vote on in terms of money to bring it about, or is it all on executive order?
Mr. Halpenny: The answer we give you, Mr. Chair, is that those are the kinds of terms that will evolve with the setup of the GOCO contract. The whole governance model is part of the review and process going forward.
The Chair: It is not clear to me from what you have told us. After the laboratories are sold, will AECL still be involved in advanced reactor research? We never made a reactor using that new technology. Will the maple reactors in Chalk River still be part of AECL or will they be sold off? Will the production of medical isotopes be under AECL or will that be sold off?
Mr. Halpenny: These are the mandates that will be built into the GOCO contract. It is envisioned that it will be with a Crown corporation in more of an oversight function. This whole file will evolve.
The Chair: We do not know yet, do we?
Mr. Halpenny: NRCan has the lead on this. It is in the earlier stages, but is progressing quite well, as I noted.
The Chair: The Public Safety presentation at page 7 talked about enhancements to ensure the sustainability of the program. Have you talked to us about all the enhancements you have planned, or is there something else to tell us?
Mr. Robertson: No, it is simply the reference to the fact that we are intending to consult with the provinces and territories. It was simply a mechanism to ensure that you were aware of that.
The Chair: I see no other senators on my list, and our time is up. Thank you very much Atomic Energy of Canada Limited and Public Safety Canada. We appreciate the work you are doing for Canada. Good luck in the future.
Honourable senators, we will meet this afternoon at 2:30 in this room. We could not get the room in Centre Block for today, but we will have it the rest of the week for our afternoon meetings. We will meet a half hour later today because the Senate starts a half hour later today. We will see you here at 2:30, when we will continue with Bill C-60.
The meeting is concluded.
(The committee adjourned.)