THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Thursday, February 25, 2021
The Standing Senate Committee on National Finance met by videoconference this day at 1 p.m. [ET] to study the Supplementary Estimates (C) for the fiscal year ending March 31, 2021.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Senators, before we begin, I’d like to remind senators and witnesses to please keep your microphones muted at all times, unless recognized by name by the chair.
Should any technical challenges arise, particularly in relation to interpretation, please signal this to the chair or the clerk and we will work to resolve the issue. If you experience other technical challenges, please contact the ISD Service Desk with the technical assistance number provided.
The use of online platforms does not guarantee speech privacy or that eavesdropping won’t be conducted. As such, while conducting committee meetings, all participants should be aware of such limitations and restrict the possible disclosure of sensitive, private and privileged Senate information. Participants should know to do so in a private area and to be mindful of their surroundings.
My name is Percy Mockler, I am a senator from New Brunswick and I am the chair of the committee. I would like to introduce the members of the committee who are participating in this meeting: Senator Boehm, Senator Dagenais, Senator M. Deacon, Senator Duncan, Senator Forest, Senator Galvez, Senator Klyne, Senator Loffreda, Senator Marshall, Senator Richards and Senator Smith. We also welcome Senator Pate.
I wish to welcome all of you and viewers across the country who may be watching on sencanada.ca.
Today, we begin our study of the expenditures set out in the Supplementary Estimates (C) for the fiscal year ending March 31, 2021, which was referred to this committee on February 16, 2021, by the Senate of Canada.
For this first panel, we welcome representatives from the Treasury Board Secretariat of Canada. We have the Assistant Secretary, Expenditure Management Sector, Mr. Glenn Purves. He is accompanied by Ms. Lola Paulin, Senior Director, Expenditure Strategies and Estimates; Ms. Karen Cahill, Assistant Secretary and Chief Financial Officer; Ms. Sonya Read, Acting Assistant Secretary, Digital and Services Policy; Mr. Roger Ermuth, Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General; and Ms. Sandra Hassan, Assistant Deputy Minister, Employment Conditions and Labour Relations.
Welcome to all of you and thank you for accepting our invitation. Mr. Purves, I have been informed by the clerk that you have a short statement.
The floor is yours, sir.
Glenn Purves, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, chair and senators. Good afternoon. It’s a pleasure to be here, and thank you for the invitation to speak to the committee about Supplementary Estimates (C) 2020-21, which were tabled last week.
Before we turn to your questions, I would like to provide a brief chapeau to Supplementary Estimates (C), additional features we have included in the supplementary estimates in response to queries we received last time we appeared at committee regarding financial transparency on the government’s response on COVID-19, in alignment, of course, with the Department of Finance fiscal forecasting, and concluding with the next steps related to Supplementary Estimates (C) and supply.
On the first item, Supplementary Estimates (C) are the third of three supplementary estimates tabled in the fiscal year 2020-21. Like Supplementary Estimates (A) and (B), they outline new and updated spending needs for programs and services that were not sufficiently developed in time for inclusion in the 2020-21 Main Estimates or previous supplementary estimates.
Supplementary Estimates (C) support Parliament’s consideration of the final planned appropriation bill for 2020-21 that authorizes payments, including those laid out in the Fall Economic Statement of 2020, which was tabled on November 30.
Supplementary Estimates (C) 2020-21 present a total of $8 billion in incremental budgetary spending, which reflects $13.4 billion in voted expenditures offset by a $5.4 billion decrease in forecast statutory expenditures.
As with Supplementary Estimates (A) and (B), Supplementary Estimates (C) largely focus on responding to the public health threats posed by COVID-19 and its impact on Canadians. Roughly $9.9 billion, or 74%, of the voted requirements are for the government’s response to the impact on Canadians during the COVID-19 global pandemic.
These estimates also show, for information purposes, increases and decreases in planned statutory expenditures, including expenditures pursuant to the proposed Economic Statement Implementation Act, Bill C-14, which is currently in the House of Commons.
Overall, about 89% of the voted spending sought through these estimates is to support 10 organizations, 4 of which are seeking over $800 million to meet their priorities. They are: the Public Health Agency of Canada, with $6.3 billion, including 2.5 billion for medical research and vaccine developments, and $1.7 billion for protective gear and medical equipment; the Treasury Board Secretariat, our department, with $1.7 billion for negotiated salary adjustments; the Department of Indigenous Services with $1.6 billion to continue supporting Indigenous peoples and communities; and Global Affairs Canada with $896 million to support developing countries.
Like all estimates, the final supplementary estimates for the 2020-21 fiscal year are part of a broader set of reports to Parliament, such as departmental plans and departmental results reports and the public accounts, as well as enhanced information available through our GC InfoBase that provide transparency on government spending, plans and actual spending for Canadians and parliamentarians.
In an effort to advance the financial transparency of the government’s planned spending response to COVID-19 in particular, important enhancements have been added to Supplementary Estimates (C) and GC InfoBase for the benefit of parliamentarians and Canadians, including a description of all COVID-19 legislation that supports spending authorities, a detailed listing of all COVID-19 spending authorities through GC InfoBase, an online annex with information regarding planned spending related to the COVID-19 response and aligned to the Fall Economic Statement for 2020, and an alignment on the planned spending of estimates to date with the overall forecast of expenses in the Fall Economic Statement for 2020.
Of course, we have continued our practice of tagging initiatives that are COVID-related and listing the specific legislation related to statutory items in our forecasts.
To conclude, I would like to give you a heads up that two appropriation bills will be introduced in March 2021, one to approve expenditures presented in Supplementary Estimates (C), and, in light of the fact that just this morning we tabled the Main Estimates for the fiscal year 2021-22 and the departmental plans to support those Main Estimates, a second appropriation bill to provide the interim supply for the 2021-22 Main Estimates. We, of course, are pleased to return to answer any questions you may have on that package.
Mr. Chair, I’ll conclude by thanking the committee for their diligence and ongoing study of the government’s spending. We sincerely strive to adapt and improve the transparency of planned spending. That is the raison d'être of the estimates, especially during these challenging times. We look forward to the committee’s valuable feedback and answering any questions you may have. To my departmental colleagues, I would invite you to jump in on any questions that are in your area of focus.
Thank you, chair.
The Chair: Thank you, Mr. Purves, for the statement. We will now proceed to questions.
I would like to share with the senators that, for this panel, you will have a maximum of seven minutes each; therefore, please ask your questions directly. To the witnesses, please respond concisely, and the clerk will make a hand signal to show when our time is up per senator.
Senator Marshall: Thank you, Mr. Purves and your officials, for being here today to answer our questions.
My question relates to an item that shows within the Treasury Board Secretariat. It’s regarding the Financial and Materiel Management Solution Project. The budget amount is $7.37 million, and I would like some information on timelines for that system and costs.
Specifically, when did the project start? It looked like it started in 2015, but I would like confirmation of that. When do you estimate that it will be complete? I would also like to know the cost, to date, and the estimated cost to complete.
Karen Cahill, Assistant Secretary and Chief Financial Officer, Treasury Board of Canada Secretariat: I will take this question, Mr. Chair.
The project started in 2015 — yes, you’re right — and it’s a combination of projects. Those contributions are voluntary contributions. As I previously mentioned, this project aims to bring 14 departments that are currently on a financial system that will no longer be supported by the vendor on a most recent SAP platform called S/4HANA. This part of the project aims to end in early fiscal year 2021-22.
There were delays. The departments were supposed to be brought onto the new platform last fiscal year, but you will understand that COVID has delayed the implementation of the system, primarily because TBS had initially invoked their BCP, business continuity plan, so some of the contractors working on the project could not work at the beginning of the pandemic.
This is the first of many projects. It will aim at helping other departments — and the voluntary contributions from many departments — to join the SAP S/4HANA platform for financial systems.
Senator Marshall: The costs, dollars.
Ms. Cahill: Yes, that’s what I’m doing. To date, the cost of the project is about $91 million.
Senator Marshall: How much has been spent to date? Is the $91 million for completion? I was thinking actually $100 million, so that’s close. So how much has been spent to date?
Ms. Cahill: We have spent $91 million to date.
Senator Marshall: Okay. So how much is left to complete? Because you’re not going to complete until 2021-22.
Ms. Cahill: To complete this portion, we’re budget forecasting about $29 million next fiscal year.
Senator Marshall: Okay.
One thing I noticed is that the transfers are coming in from seven different departments, and there are varying amounts. You’re getting $4 million from National Defence, but then for Canada Border Services, you’re just getting $1 million. You said there were 14 departments. Why are there varied amounts for departments?
Ms. Cahill: The departments that you see in these supplementary estimates have been providing us with voluntary contributions. That’s why you see different values of the contribution. This is based on what their budget allows them to contribute. The smaller departments are also contributing, as they will benefit from the new licences, et cetera.
Senator Marshall: Is this the biggest system under development within the government? This one is over $100 million.
Ms. Cahill: I couldn’t talk to the overall systems; I don’t know.
Senator Marshall: Could Mr. Purves answer that? I’d be interested to know.
Ms. Cahill: It’s certainly the biggest financial system.
Senator Marshall: Mr. Chair, is my time up?
The Chair: No.
Mr. Purves: Apologies, senator, I didn’t get your question.
Senator Marshall: I’ll carry on.
Treasury Board has an oversight function within government. Thank you for the information on that particular project. So what other major projects are ongoing within the government that are of this magnitude? This one is over $100 million. Is that the most costly?
Mr. Purves: It might be best if we get back to the committee with a list of the different IT projects that are going on. When you say “IT project,” do you mean financial management, or are you talking about the management of benefits and —
Senator Marshall: Everything.
Mr. Purves: There are different scopes of IT projects to deal with different purposes.
Senator Marshall: Not just the financial ones; I’m also interested in the program ones. After the experience we had with Phoenix, I would like to have an idea as to what projects are ongoing, the large ones. The large ones span several years, so when we look at the estimates, we just see funding for one year. In order to track it from year to year — this particular one that I was just asking questions about started back in 2015. So even though it just shows up as $7 million in this estimate, it’s actually $100-million-plus project.
So I would like to know what major projects there are.
The Chair: Mr. Purves, make sure to provide the list to the clerk for the committee.
Mr. Purves: Absolutely. It’s a great question. Thank you.
[Translation]
Senator Forest: Thank you to the witnesses. My question has to do with the $1.702 billion being requested for compensation adjustments and transfers to departments and agencies. This amount includes funding to compensate current Public Service Alliance of Canada, or PSAC, members for general damages associated with the Phoenix pay system and for grievances related to the late implementation of the 2014 round of collective bargaining.
PSAC told its members last week that the $2,500 in compensation being provided to federal public servants for damages associated with the Phoenix pay system would be taxed. The union argued that the money was compensation, not employment income.
I don’t want to comment on the matter one way or the other, but the decision was made by the Canada Revenue Agency, or CRA. What I don’t understand is how this came as a surprise when Treasury Board and PSAC signed an agreement. How could they have signed an agreement without resolving such an important issue first?
I’d really like an explanation as to how the CRA can decide after the fact to tax the compensation.
Sandra Hassan, Assistant Deputy Minister, Employment Conditions and Labour Relations, Treasury Board of Canada Secretariat: I can answer that, Mr. Chair. Thank you for your question, senator. Yes, you’re absolutely right that, in October 2020, we reached an agreement with PSAC to compensate members for problems caused by the Phoenix pay system and for grievances related to the late implementation of the 2014 round of collective bargaining.
After being signed in October 2020, the agreement was submitted to the CRA, which came to the conclusion that the payment was taxable. Consequently, the employer will adhere to the CRA’s interpretation and tax the payments at the source.
Senator Forest: The fact that the CRA could decide to tax the compensation never came up when you were hammering out the agreement?
Ms. Hassan: During the talks between the employer — in other words us, the TBS representatives — and PSAC, the union asked us whether the payments would be taxed, and we were very transparent with them: We told them that it was not a question the employer could answer. We made a commitment to submit the agreement to the CRA, which is responsible for interpreting the Income Tax Act.
Senator Forest: Thank you. Are the talks with other employee bargaining groups progressing right now? Is the same level of compensation being discussed, a taxable payment of $2,500?
Ms. Hassan: Thank you for your question.
In 2019, we signed agreements with all the unions except PSAC. The compensation provided to members of the other unions was not the same as what PSAC members received. PSAC negotiated a payment for its members, whereas the other unions agreed to be compensated for Phoenix-related damages in the form of leave, days off. Members of the other unions received up to five days of annual leave in compensation for the problems caused by Phoenix.
The agreement covered an extra year, and it was implemented. What you see in the supplementary estimates before you relates solely to the compensation provided to PSAC members.
Senator Forest: I’d like to be on the list for the second round, Mr. Chair.
[English]
Senator Klyne: Welcome to our guests. Thank you for the presentation. I have two questions, and they should go quickly. The first one — I’m not sure who would like to answer — is regarding the Canadian Digital Service. There is an ask of $3.8 million. For those listening, the Canadian Digital Services partners with departments to design, test and build easy-to-use services.
My question is around the $3.8 million and how this is related to the COVID-19 response.
Ms. Cahill: Thank you for the question. Most of the $3.8 million is related to the COVID-19 response. Actually, $3.1 million of it is related to the implementation of the COVID Alert application that, for the most part, has been disseminated, implemented across the country.
A very small portion, $300,000 of the $3.8 million, has been allocated to increasing services to departments within the Government of Canada to provide them with rapid assistance to help deliver on their respective COVID response.
Senator Klyne: Okay. Thank you for that. I might want to ask another question later in the next round, if there is one, regarding the value for money on the alert.
My second question — Mr. Purves may want to answer this one as well — is on the Joint Learning Program, $747,000. The Joint Learning Program is a partnership between PSAC and the Treasury Board Secretariat to design, develop and deliver learning events to improve labour relations and increase the understanding of union and management roles in the workplace. I have run a couple of medium-large corporations that involved working with unions, including CUPE, IATSE, the Communications, Energy and Paperworks Union of Canada and PSAC. Just from the perspective of value for money, you need to help me understand the necessity of this.
Ms. Hassan: I can answer that question. The Joint Learning Program is a partnership between the Public Service Alliance and Treasury Board Secretariat. It was created further to a negotiation we had with the union to jointly deliver learning activities.
Every year, the two groups — the management and the bargaining agent — come together and they co-develop learning activities that will be of value for what the bargaining agencies and the employer see as being a subject of interest.
I have a list of topics that will be included in upcoming workshops. For example, there is the duty to accommodate; employment equity; mental health in the workplace; respecting differences; anti-discrimination; preventing harassment and violence in the workplace; and understanding a collective agreement. These virtual sessions bring together representatives and members from the bargaining agent and are very useful in helping train employees — public servants — and in making sure that the training is also seen of value for our partners, the bargaining agents.
Senator Klyne: Is this delivered through an intermediary or a third party?
Ms. Hassan: It’s usually delivered with a cross-section of employees and bargaining agent representatives. I cannot say that it’s always internal; I can check on that.
The Chair: And you could provide the information through the clerk, Ms. Hassan?
Ms. Hassan: Absolutely.
The Chair: To the witnesses, when you answer a question, would you please identify yourself for the record?
Senator Richards: I have a few quick questions just for clarity and disclosure. For instance, we have $188 million going because of unrecoverable losses for 31,000 student loans. I’m wondering how these are unrecoverable. We have some $300 million or so going to developing countries for climate change. What countries might these be, what agencies would receive this money and is this going to Canadians on the ground who are facilitating this aid and help?
We have an expenditure of $126 million for research into alternate energy technology out west when thousands are out of work in the oil fields and thousands more cannot keep the upkeep on their businesses. Where will this money go? To what end will the research facilities be beneficial in the time of COVID-19? I know these are questions you may have to come back to me to answer. It’s a matter of disclosure and clarity that I’m after. If anyone could help me with this, I would be grateful.
Mr. Purves: Thank you for the question. I’ll start on the student loans question, and perhaps my colleague Lola Paulin will be able to follow up on the Global Affairs question.
Effectively, this is something that comes through every year. In order to extinguish a debt, it has to go through Parliament and it’s treated as an expenditure. Over the past decades and the last few years, it has ranged in the area of about $160 million to $200 million. I believe it was about $180 million last year.
Just to step back, there are many efforts made by the Department of Employment and Social Development Canada along with the Canada Revenue Agency in order to ensure that there are participating loans and they are able to actually get these payments. There is a statutory obligation that after six years, you need to extinguish the non-performing loans, and 80% of that has to do with that effort. If you look at the efforts taken in the early 2000s versus the status of non-performing now, it has come down quite a lot. There have been considerable efforts taken by those two departments in order to ensure there is a performing component of the loan.
The amount of $188 million is about 1% of the total portfolio of existing loans. It’s about $20.5 billion right now. I should add that the other two reasons why loans would be forgiven in this way is if it’s non-performing and under $20, and if someone has declared personal bankruptcy as a consequence.
Lola, do you want to jump in on the second question?
Lola Paulin, Senior Director, Expenditure Strategies and Estimates, Treasury Board of Canada Secretariat: Yes, absolutely. I can talk a little about the little over $300 million to Foreign Affairs for climate change. Of that $341 million, there is approximately $190 million that will support the International Fund for Agricultural Development. This fund’s mandate is to enable poor rural men and women, especially small holder farmers, to become more climate resilient, recover from the impacts of the pandemic, and achieve food security and nutrition.
There is about $100 million that will be used to establish a new Canadian climate fund at the African Development Bank. This fund will target private and public sector projects in a variety of climate change mitigation and adaptation sectors, such as renewable energy, energy efficiency, forestry, agriculture, urban development, sustainable transport and water management.
Finally, there is a little over $15 million that will support the Land Degradation Neutrality Fund. The fund’s mandate is to mobilize significant investments from the public and private sectors beyond official development assistance to support sustainable land use and restoration projects, while also generating attractive financial returns for investors. Canada’s contribution will leverage private finance investments to restore up to 500,000 hectares of degraded land, reduce or avoid greenhouse gas emissions of up to an equivalent of 35 tonnes of carbon dioxide, and create or support approximately 100,000 jobs for the most vulnerable populations, particularly women in developing countries.
Mr. Purves: Thank you, Lola.
Senator Richards: You couldn’t lay out a synopsis of where those countries are, could you? Do you know? Maybe you can get back to me on that.
Ms. Paulin: We can get back to you, for sure. I don’t have the exact countries on hand.
Senator Richards: Thank you very much.
Mr. Purves: Senator, we’ll get back to you on the alternative energy question you had, as well. There was a third item, I believe.
Senator Richards: That’s fine. Thank you.
[Translation]
Senator Dagenais: My question is for Mr. Purves. When the Parliamentary Budget Officer examines the government’s funding commitments, we tend to be surprised by the discrepancies between the figures advanced by the political arm of the government and the figures that reflect the reality. Yesterday, for example, I was there when Mr. Giroux released his report on the cost of replacing the navy vessels, and surprisingly, he announced that the cost estimate had gone from $60 billion to $78 billion. That’s a difference of $18 billion. On top of that, he put the program end date, in other words, the date by which all the ships would be replaced, at 2046. I won’t be around then, but I can only imagine what it will have cost. I asked a question about the cost increase, and I was told that it was due to the time frames, but they couldn’t tell me any more than that.
Do you have people on your team whose job it is to reconcile the numbers and more accurately reflect the costs of the commitments made?
[English]
Mr. Purves: Thank you very much, senator. It’s a great question. There are many facets to Treasury Board Secretariat. Looking at ensuring that parliamentary authorities are secured for in-year spending is the bread and butter of what we do with respect to these appropriations and so forth.
In terms of the broader questions about costing and how a department would undertake its costing, that is, of course, very much departmentally specific. They have certain guidelines that they have to follow in terms of ensuring that costing is undertaken in a credible way. We have a representative from our Office of the Comptroller General, who might actually have a better line of sight on the broader framework for that. We would certainly be happy to get back to you on that issue.
Roger Ermuth, Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General, Treasury Board of Canada Secretariat: In terms of speaking specifically to the ships, that is something we would have to take back and have a little more discussion with the Department of National Defence. I can tell you that in terms of the amount of work and effort that has gone on over the last five or six years towards building and increasing costing capacity and telling the story, recognizing that with each given year — and I think the Parliamentary Budget Officer’s report acknowledges [Technical difficulties]
[Translation]
Senator Dagenais: This question is for Mr. Purves as well. To what extent does the current government give you latitude to limit unnecessary spending? Once planned spending has been approved, can you spend the money without regard for potential savings?
[English]
Mr. Purves: That is a great question. There is a distinction between planned spending and actual spending. My purview is in that world of providing parliamentarians with the best information possible to be able to make decisions on planned spending. As you know, we have our supplementary estimates documents where we try to set this out, but we also include a lot of online annexes that go with it. Often, people don’t go and look at these online annexes. Our intention is to give you a sense not only the proposed spending authority at that moment, but also the change in spending authority that is planned to give you as much transparency as possible.
The Parliamentary Budget Officer did speak in his report yesterday about frozen allotments. It gives you a sense of how much of the planned authorities that have been approved to date through Main Estimates, but also through supplementary estimates, are being frozen and being considered in future years. As decisions are made, we have an opportunity to bring those to you as they are available through the supply cycle and our tabling of these documents. We also do that through our GC InfoBase to the best of our ability.
The best testament of that is what we have done on GC InfoBase with respect to giving you a sense of the voted and statutory authorities that have been approved and revealed in different supplementary estimates this year. If you step back and look at the overall estimates for this year, to date we have estimates of about $480 billion, of which about $160 billion is COVID related. There is a good sense of what is COVID related and what is not COVID related. We try to give you a sense of what is going to be staying in this fiscal year, in terms of an up-to authority that departments might need and what we expect to move into a future year as per our frozen allotments report.
Senator Galvez: My colleague Senator Richards just mentioned there is money being given to students for their loans, research and foreign assistance money, and we are not giving enough to the oil workers, but on page 57, there is a payment of $320 million from the Department of Finance to the Province of Newfoundland and Labrador to support offshore energy sector workers. This payment was authorized under the Financial Administration Act section 60.2(2)(b), which, until September 30, 2020, allowed making payments to a province or territory, or after consultation with a province or territory, to an entity for the purpose of responding to a situation of significant and systemic economic and financial distress. The statutory authority to make this payment lapsed on September 30, 2020, and the funding was announced on September 25, 2020.
Can you assure us the payment was done before the statutory authority to do so lapsed? Did other provinces or territories receive such payments before September 30, 2020?
Mr. Purves: We do validate that with the Department of Finance to ensure that when they are accessing that, they have that statutory payment authority, that it is valid, and they are being able to charge it so long as that payment authority exists. We would not be able to put it in here if they did not check those boxes there.
I understand the Department of Finance is appearing after us, and you could certainly raise that point with them as well, but, yes, it was a payment to the Province of Newfoundland and Labrador. You are talking about the $320 million; is that correct?
Senator Galvez: Yes.
Mr. Purves: It was in response to the significant economic and financial distress of the province’s offshore petroleum sector this year.
Senator Galvez: Is some of this money going to go to financing the new regulations for safety and health that we just passed in Bill S-3 in the Senate?
Mr. Purves: Senator, when we include statutory information, it’s for your information. We don’t have much of a purview on it because we don’t have much authority on it.
In terms of what happens to the payment after it’s released, we wouldn’t have a line of sight on that. That is a question that the Department of Finance might have a better line of sight on.
Senator Galvez: My second question is regarding the Canada Infrastructure Bank. These supplementary estimates include $2.3 billion in statutory authorities to the Department of Finance for a payment to the Canada Infrastructure Bank. The funding is part of the planned $35 billion capitalization of the CIB, which was announced in 2017. Funding flows from the Department of Finance to the CIB based on the approval of projects and consequential requirements. However, the PBO sent an information request to CIB on February 11 seeking additional information on the status of projects it has assessed since 2018-19.
To your knowledge, has the CIB replied? Why is this information not already made public considering the importance of these public sums that are involved?
Mr. Purves: Senator, I would like to be able to give you an answer to that question. It probably would be best presented to the Department of Finance in the next session, or we can certainly follow up with the Department of Finance on it.
In terms of whether they have replied to the PBO, we wouldn’t have that information.
Senator M. Deacon: Thank you to all of you for being here this afternoon. The question I have is around the supplementary mandate letter that would have been received by Minister Duclos. It focused on a number of items. One item was on diversity. He has been tasked with implementing and developing an action plan to increase representation in our federal workforce in a number of demographics.
It’s hard to quantify what an end goal could look like on diversity, but I’m wondering if the department has deliverables in mind, or will it be an ongoing project to remain vigilant and sensitive to the need for our public service to reflect the make-up of our Canadian population?
Mr. Purves: Ms. Hassan would probably be best placed to answer your question, senator.
Ms. Hassan: Thank you, Senator Deacon. In keeping with the supplementary mandate letter, we do have a team that is in the office of the Chief Human Resources Officer in charge of looking at implementing diversity and inclusion. We know we haven’t achieved a parity with all workforce availability, and progress is going to be made.
In the Fall Economic Statement, funding to support the creation of a centre on diversity and inclusion was provided. That centre will be working on that work plan and developing a number of initiatives. We are looking at the diversity targeted management development program, which will be designed and established this winter with an official launch expected in the summer, and a mentorship plus initiative that includes sponsorship that pairs proteges with sponsors help those candidates be better known in a number of networks.
We have also been releasing data on the representation — and I would say much better data — that will help to understand where the gaps are and where the additional work is needed. We are all very much conscious of the call to action we all received from the Clerk of the Privy Council asking everyone to have that at the top of their mind and on the top of their list of things that we need to be working on collectively.
Senator M. Deacon: Thank you for that. My other question concerns plans — and it’s a little connected — for what our post-pandemic public workforce might look like.
The first item on the supplementary mandate letter tasks Minister Duclos with working with the Minister of Public Services and Procurement and the Minister of Digital Government to look at this enhanced flexibility in working arrangements moving forward for federal public servants. I wonder what these discussions are looking like and whether you are at the point where you envision a home-office mix. Are there cost savings you can envision if we transfer to a more home and work structure?
Ms. Hassan: Thank you for that question, Senator Deacon. In fact, since the beginning of the pandemic, we have seen that because of the pandemic we needed to have many of our employees working from home to limit the spread of the virus. The IT infrastructure has been developed, and now a majority of employees in many departments are working successfully from home and are able to log on to the work site.
Last summer, we worked at looking at plans for a return to the work site. Unfortunately, the second wave arrived and that wasn’t launched. The plan for the workplace post-pandemic certainly is one we are looking into, looking at the future of work, what it could look like in terms of installation, how the buildings will need to be adjusted in a post-pandemic world. The work is still ongoing. We don’t have a fulsome report today, but the work is ongoing.
Senator M. Deacon: Thank you.
Senator Boehm: I’m not sure who would like to take my question, but it’s about the money allocation to isolation measures. As we know, travellers are responsible for bearing the cost of the mandatory hotel stopover, which will include having to pay for the cost of food, room, security services, transportation and infection prevention and control measures.
In the supplementary estimates, there is over $225 million allocated to COVID-19-related border and travel measures and isolation sites. Could you tell us more about how much of that funding is allocated to this mandatory hotel quarantine and for what it is paying, given that the idea behind this policy is that travellers bear the cost and taxpayer money is not necessarily used?
Related to that, I understand that bookings can’t be made directly with the hotel, but that the cost of these hotel stopovers may vary by location. Of course, that’s what market forces are about in our country. How are the prices for each hotel quarantine bundle determined? Is it determined by the Government of Canada or by the hotels? Is the government supplementing some costs to the hotels that have been selected — we know the industry is suffering — and is there an oversight mechanism for this?
Mr. Purves: Thank you very much, senator. That $225 million was included with which department? Was it with the Public Health Agency? My apologies.
Senator Boehm: I’m not quite sure.
Ms. Paulin: It is with the Public Health Agency.
Mr. Purves: Senator Boehm, it’s a great question. There is a whole series of questions there to unpack.
The Public Health Agency of Canada is using its existing resources and adjustments that they will be receiving to be able to address whatever costs they have identified to be taken on with respect to this initiative.
In terms of better understanding that split, Lola, would you happen to have any information on that, or is that something where we would have to go back to the Public Health Agency of Canada to get a better line of sight for the senator?
Ms. Paulin: We would most certainly have to go back to the Public Health Agency of Canada and get back to him on that particular. We wouldn’t have the details surrounding the specifics for the hotels, the new measure that was brought about.
Mr. Purves: Great. Thank you.
Senator Boehm: I’m particularly interested in the oversight mechanism. This issue is very much in the news. Canadians are asking questions, and I think it behooves us to get some answers as to whether there is a built-in subsidy, whether there are deeper consultations with the hotels, whether there is a fluctuation in pricing across the country, so any specifics like that would be very helpful.
This next question is with respect to long-term care homes. The outbreaks in our long-term care homes have been a great concern nationally. In the last week, the Canadian Association for Long Term Care released recommendations for national standards as being an urgent requirement. But the report emphasized these can only make a difference if they are tied to budgetary investments. I’m pleased to see in the estimates there is an allocation of $505 million towards much-needed investment in our long-term care homes across the country. However, I would like to know whether some of this funding is allocated towards at least investigating, implementing and identifying national standards of care in long-term settings — because this issue is not going to go away; it will be with us in Canada for a long time — and in preparation for future emergencies of this kind.
Mr. Purves, I’m not sure if it’s you, but give it a shot.
Mr. Purves: Again, it’s a great question. The one thing I would say on this, Senator Boehm, is that payment authority is achieved in two different ways. It’s achieved either through legislation, through the statutory path, or it’s achieved through the Appropriation Act, and it’s captured in the voted side.
Right now, there is a bill making its way through Parliament that includes a payment authority specifically for the long-term care funding that you’re citing. Ultimately, when we table the Appropriation Act, it will not effectively include that long-term care component. It’s Bill C-14 that includes the payment authority to be able to release funds and to have the Minister of Health be able to access those funds and the health department be able to proceed.
I had understood that it did include not just supports, but other elements. Just to ensure we have an appropriate record for you, we will get back to you on your supplementary question as well.
Senator Boehm: Thank you very much. I would like to go on the second round, please, chair.
Senator Duncan: Thank you to the witnesses who have come before us today. My question is directed to Ms. Hassan. Forgive me, it’s a little bit into the weeds — the details, if you will — regarding the Joint Learning Program.
As Canada moves towards truth and reconciliation, retired Senator Sinclair’s reference to education being key to moving forward comes to mind. I’m aware that, for example, the Northern Institute of Social Justice, through Yukon University, offers a weekend Yukon First Nations 101 course. New employees at one of the government facilities, the Yukon hospital, are required to take this course as training for new hires. That’s the Yukon situation. I’m sure Nova Scotia has amazing similar courses with their academic community educating Canadians about Black history.
As we move toward trying to recognize and deal with systemic discrimination in our country, it seems to me that this sort of education and awareness is not only important for individuals involved in the provincial and territorial public services but the broader public service. Their situations are different everywhere in the country. I’m sure we could come up with 14 different courses that should be taken. Senator Deacon referenced the move toward diversity in the public service. We also need the education of existing public servants.
As part of this Joint Learning Program, what initiatives are under way with regard to providing educational opportunities, such as I have just mentioned, to not only new public servants but existing public servants and the differences in educating the — forgive me — Ottawa bubble of these differences across the country? Could I have that explanation, please?
Ms. Hassan: Thank you, Senator Duncan. As I indicated previously, the Joint Learning Program is a partnership between the Public Service Alliance and the Treasury Board Secretariat. In the list of workshops that have been given, we do have some on respecting differences and anti-discrimination.
You have mentioned very important topics, such as truth and reconciliation, Black history and issues of systemic discrimination. What I can say is that anti-racism is on the list of upcoming training that has already been developed, and more will be developed and delivered in the upcoming fiscal year 2021-22.
I can certainly make sure that your concern and suggestion is provided to our representatives on that committee and see if they can have a discussion with our bargaining agent colleagues who are developing the agenda for the upcoming year or years, as well as the upcoming training, and see if the Joint Learning Program could be used for purposes of that training.
There is also, as you know, the Canada School of Public Service that provides training and where such subjects are already on the agenda of what they are offering to employees and managers.
Senator Duncan: Could I follow up, Mr. Chair, with just one quick question?
The Chair: Please do, senator.
Senator Duncan: Thank you, Ms. Hassan, for that answer. I appreciate that courses are made available and that you have taken my suggestions under consideration.
What follow-up is done? For example, what performance indicators do we have about the courses that are offered? What’s more, is it a requirement in your annual performance evaluation that the managers reporting “x” number of employees have availed themselves of these courses?
It’s not simply new hires, but perhaps more than once in their lifetime in the career of a public servant, individuals should be taking these courses and proving that they are implementing the recommended actions. So could you talk about the performance indicators, please?
Ms. Hassan: Thank you. The Joint Learning Program is but one of the avenues for training that we have in the public service. As I have indicated, there are other legislated obligations that are imposed on employees where courses have to be developed, either at the department or government level, where all employees must take that training.
If I take the example of the recent amendment to the Canada Labour Code, this came into force on January 1 of this year, and mandatory training will have to be given to all employees on harassment and discrimination. Consequently, for that type of legislated obligation, we would see a necessary reporting because all employees and managers would have the obligation to follow such training.
So the Joint Learning Program exists. We will take your suggestion back to them, but there are many other avenues to ensure that mandatory training on subjects that are very important to the government are done.
Senator Loffreda: Thank you to the Treasury Board of Canada Secretariat for being here, and to all the witnesses.
My question is on the Canadian Digital Service and their $3.8 million ask. I would like to follow up. You mentioned previously that a substantial amount of that ask is for COVID and on the COVID app. I would like you to elaborate on the monitoring of this investment. Has it been efficient? Is it popular? What are some of the challenges? Does it need modification?
Tracking is so key to controlling this virus. I think it’s important to share an update and maybe reassure Canadians and encourage them to use it more than they have been and reassure them that there is no personal data being stored on this app. Thank you for your response.
Ms. Cahill: I will take this question. With the funding, CDS, the Canadian Digital Service, is now supporting the application, responding to questions from Canadians that are using the application, but also making changes based on the feedback that we receive from users of the application.
As you know, the COVID Alert app has been implemented across the country — almost — and along with other public service health measures such as wearing a mask, washing your hands, physical distancing, this application is key in fighting the COVID-19 virus. We are definitely using the money to make enhancements to the application, and we also have the dashboard website that tracks metrics, and more metrics will be added to the dashboard eventually. Although I don’t have the web links to the dashboard, I would be more than happy to provide the links to the clerk of this committee.
Senator Loffreda: Thank you for the response to the COVID app.
My other question is to follow up on diversity. We all know how difficult this pandemic has been for women and minorities, and how important diversity is to our economy. We see in Supplementary Estimates (C) that Treasury Board is requesting $637,000 to promote and encourage a more diverse and inclusive public service. Senator Deacon asked a great question.
I would like you to elaborate. Is there any communication or anything we can share with corporate Canada? Is some of this ask going towards those programs so we can give them an example, be the lead in saying, “Here is what we are doing to promote diversity, and here is what corporate Canada could take as an example from our lead.” Could you perhaps reiterate and share some of those targets, results to date, compared to previous years?
There has been a lot of discussion around diversity so far. Have we improved this year compared to last year? What do you target for next year or the year after next? Thank you for your response once again.
Mr. Purves: I think that’s for Ms. Hassan or Ms. Cahill.
Ms. Hassan: Thank you, senator. I’m uncertain of the question, if it was a question as to what was being done in the public service or if a part of the funding was for external corporations. So my understanding is that the sums included in Sup C are for the office of the Chief Human Resources Officer. As indicated previously, it will support the creation of the centre on diversity and inclusion. We are working at helping our minister in the mandate commitment that he has received. This amount, just to be precise, is for the fostering of diversity and inclusion in the public service. Certainly, once we have put up initiatives and are ready to launch others, we will be in a good position to report, but it will be a reporting of what is done within our offices.
Senator Loffreda: That was clear. That was the question, what is being done in your offices. But what else can we communicate, as an example, and more communication to corporate Canada; not for corporate Canada, but rather communication.
Have we seen some improvement so far? Is it still too early to say there has been some improvement or what are the improvements being forecast based on this investment, just to give it some value?
Ms. Hassan: The work has commenced, but in terms of being able to report today, it is somewhat early in the process. We are asking for the funds. We have a team in place. We’ll be working diligently and hopefully we’ll have measurable results that we can report on.
Senator Loffreda: Do we have objectives, targets or anything you can share on that side? We all wake up with objectives in the morning. I think those are important, especially when we make any size of an investment.
Ms. Hassan: You are absolutely correct. For the private sector, some have launched what we call the 50 — 30 Challenge, which asks organizations to aspire to, for example, gender parity, 50% on Canadian boards and senior management and 30% of EE representation. There are specific targets that are being set and are being communicated by senior leaders to their organizations, and that typically trickles down into the organizational plans. We do know that we will have to be reporting back to you and to Parliament on the results that will have to be achieved.
Senator Loffreda: And to the public. Thank you.
Senator Smith: For the Treasury Board, to its credit, the government attached a reconciliation document to the estimates that reconciles all spending authorities granted between the Fall Economic Statement and estimates. However, the document does not include any additional spending measures announced after the Fall Economic Statement, which was published in November 2020.
Will the department update the reconciliation table on a more frequent basis as more spending programs are introduced?
Mr. Purves: Thank you, senator. That’s a great question.
Just stepping back, there is the distinction I mentioned before, which is on planned spending and actual spending. On the planned spending — and I think you were looking at the Parliamentary Budget Officer’s report from yesterday — I think in the swim lanes of the estimates, we have put in a lot of information on COVID that we haven’t had before, and certainly with respect to the reconciliation of what spending this is, we’re up to an estimate to date versus the forecast in the Fall Economic Statement from 2020. I think Senator Marshall was the one that had that question the last time we were here. We have also added that reconciliation as well. In that prism of the planned spending, a lot has been done.
On the actual spending, of course, we’re still in that year to date. I know that the departments have been providing as much information as they can with respect to results on transfers and so forth. As someone who is in the world of expenditure management, I would say that there is a big difference on what you can report on, in terms of actual information as the year is going on, with respect to transfers versus actual running of a program. There is a big difference between commitments and payments that are made. Those are certainly points that we will take back. It involves a broader government perspective on that to be able to bring timely information around, but it is certainly something that we will take back.
Senator Smith: Thank you. There have been concerns with respect to inconsistencies between approved COVID-19-related funding and actual spending by the various departments. This data is not readily available to parliamentarians. While the CERB and the CEWS programs provide updates on actual spending, the majority of departments do not publish this information.
Does the department have a complete breakdown of the levels of actual spending by department, the reason for any lapses in spending and what happens to any unspent funding meant to deal with the pandemic?
Mr. Purves: In terms of part of my response already, I think it did cover some of that question about the actuals. With respect to departments, what happens is that they provide their information to the Receiver General when they make actual payments, and that is something they will report in quarterly financial reporting. The Department of Finance also includes this information with respect to their fiscal monitor reporting that they do on a monthly basis, in terms of a rolled-up basis for expenditures and revenues.
But with respect to the pace of specific measures, as I said, there is a distinction between the information that could be made available for a transfer versus a program that is actually in the course of being implemented. These are things that we’re considering and, in terms of the broader lens of financial transparency, we will certainly take back and consider them.
Senator Smith: In the questioning, I was trying to get to the consistency of the departmental response, trying to get a sense of what, if any, problems have occurred with the COVID epidemic and the mentality towards the staff being able to complete the type of work that helps parliamentarians with this transparency. I’m just trying to get a sense of the flow going on within the various departments. It is more of a general question, but I think it’s a broad management question.
Mr. Purves: It is a great series of questions, quite frankly. It’s in the broader realm of financial transparency. I framed it as planned spending and actual spending. On the planned spending side, we have loads of information. On the actual spending side, departments are putting out the information they can when it’s available. When I read the PBO, it was more about whether there is a way to have some sort of a structure to this. It’s certainly something that we will take back.
There is a distinction between transfers and actual programs. It’s not all the same. We always recommend that people ask the departments about the status of implementation because they will have the best line of sight on that. But absolutely, senator, the spirit of your question is something that we will take back.
Senator Smith: Thank you very much, sir.
Senator Pate: The January 2021 mandate letter for the president of the Treasury Board includes, as a priority, leading a whole-of-government approach to collecting disaggregated data as a part of the government’s commitment to addressing systemic racism. Racialized people have been disproportionately affected, as you know, by the negative health and economic effects of the pandemic. I’m curious what measures, if any, are currently in place to collect data on demographics, including the race, Indigenous status, gender and disability status of Canadians below the poverty line who have been unable to qualify for measures like the Canada Recovery Benefit and Canada Recovery Caregiving Benefit?
Ms. Hassan: I’ll answer the first part. In terms of the work that is being done by the Office of the Chief Human Resources Officer, we have released unprecedented levels of such disaggregated data on representation for employment equity groups. We also have data from the employee survey for equity-seeking groups to better support the departments in actually addressing the gaps and the barriers.
Thank you for your question. This is something we’re very aware of and working on. I’ll turn it over to my colleague Glenn Purves.
Mr. Purves: Senator, it’s a great question. From my lens, I work in the world of estimates. The Department of Finance, which is coming up next, is the one that puts out the gender budgeting report. It’s covering a whole host of different quality-of-life indices that they look at on a regular basis. The push for better data is something that is a common theme across the government.
With respect to departmental plans that just came out for the Main Estimates today, as well as through the estimates for departmental results reports that were put out for 2019-20, it is certainly a bigger feature that we are looking to expand on. It’s critical that departments work together and that we, as a government, have a sort of central strategy for advancing data. This is something that will always be a critical issue as data collection continues to evolve as well. Thank you.
Senator Pate: Thank you.
Senator Marshall: I have a quick question. For the $1.7 billion, how many employees fall under that umbrella? How many employees will receive funding under that $1.7 billion?
The Chair: Let’s put in the three remaining questions and then we’ll ask Mr. Purves to answer. Is that fair?
Mr. Purves: That is indeed fair.
Senator Klyne: I was going to go back to the COVID Alert app, but I can do that through other means. On page 2-34 of the supplementary estimates documents, there is an item for $680,000, from the Treasury Board to the Ministry of Fisheries and Oceans, to reduce greenhouse gas emissions in government operations.
That is a relatively small amount in the big game of things, $680,000. Can you tell this committee a little about those efforts to reduce greenhouse gas emissions and the connection with Fisheries and Oceans?
Senator Boehm: My question is about temporary foreign workers, particularly in the context of cancellation of flights to and from Mexico and the Caribbean until the end of April. We need temporary foreign workers in Canada to get our agriculture industry back up and started in the spring, and, of course, they need a livelihood.
I’m wondering if there are measures to ensure that the flow of these workers will continue to enter Canada and whether there are challenges in terms of any of them having to go back because of the unavailability of flights.
Related to that, of course, are the living conditions for temporary foreign workers during their quarantine period because, as we saw the last time, they were inadequate in some instances.
The Chair: For the answers, Mr. Purves, you have two minutes.
Mr. Purves: Ms. Hassan, do you happen to have the FTE count?
Ms. Hassan: I do. In terms of the population that will receive benefits for the collective agreements covered under that, we have approximately 150,000 employees. That would cover collective agreements in the core public administration and those under separate agencies. For the population that will be receiving payments under the PSAC Phoenix agreement, we would have approximately 221,000. That covers current and former employees who could be eligible for payments under that agreement.
Mr. Purves: For greening gas emissions, I think Karen Cahill would have an answer to that one.
Ms. Cahill: This is a project that is under Fisheries. From the Greening Government Fund, we transfer money to departments. Under Fisheries, that would be the Bedford Institute of Oceanography seawater heating system. This is to put together a geothermal heat pump system at the Bedford Institute of Oceanography in Dartmouth, Nova Scotia.
The Chair: Thank you. Honourable senators, this ends our time with the first panel. The next panel will be Department of Finance Canada.
Mr. Purves, thank you again for being present and sharing that information. We will await follow-up through the clerk on the questions for which you will provide written answers.
Senator Boehm: Could I ask a question? My last question on temporary foreign workers was not answered. It would be great to get some follow-up information through the clerk.
The Chair: That is well said, for clarity.
For our second panel, we welcome officials from the Department of Finance Canada. We have Ms. Darlene Bess, Chief Financial Officer, Financial Management Directorate, Corporate Services Branch. She is accompanied by Ms. Katharine Rechico, Assistant Deputy Minister, International Trade and Finance Branch; Mr. Soren Halverson, Associate Assistant Deputy Minister, Financial Sector Policy Branch; Ms. Evelyn Dancey, Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch; Mr. Miodrag Jovanovic, Associate Assistant Deputy Minister, Tax Policy Branch; Mr. Galen Countryman, Director General, Federal-Provincial Relations, Federal-Provincial Relations and Social Policy Branch; and Mr. Bradley Recker, Director General, Fiscal Policy.
Ms. Bess, thank you very much for accepting our invitation. I have been informed by the clerk that you will make a statement, which will be followed by questions from the senators. The floor is yours.
Darlene Bess, Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance Canada: Good afternoon, Mr. Chair and members of the committee. Thank you for the opportunity to present the 2020-21 Supplementary Estimates (C) on behalf of the Department of Finance. Joining me today are departmental officials to assist in providing a more in-depth perspective on the rationale and policies supporting the numbers within these estimates.
As you know, the department supports the Deputy Prime Minister and Minister of Finance, as well as the Minister of Middle Class Prosperity and Associate Minister of Finance, by developing policies and providing advice to the government with the goal of creating a healthy and resilient economy for all Canadians. In this regard, the department is instrumental in Canada’s COVID-19 Economic Response Plan, which continues to help protect millions of jobs, provide emergency support to individuals and families, and keep businesses afloat throughout the pandemic.
The Supplementary Estimates (C) 2020-21 reflect a departmental budgetary increase of $2 billion, stemming from a $12.7-million increase in vote 1 program expenditures; a $1.8-billion increase in statutory spending; and a $200-million increase in non-budgetary expenditures. Given these increases, the department’s total proposed authorities to date are $120 billion.
The increase of $12.7 million in vote 1 program expenditures relates to funding for the Global Risk Institute in Financial Services and their National Pension Hub.
Statutory expenditures are not included in the appropriation bill as they have already been approved by Parliament through enabling legislation. However, they are included in the estimates documents for information purposes.
As noted earlier, the statutory expenditures reflect a net increase of $1.8 billion, which is mainly due to payments to the Canada Infrastructure Bank and a payment to the Province of Newfoundland and Labrador to support offshore energy sector workers. These payments are offset by a downward revision to the forecast for transfer payments to provinces and territories.
The non-budgetary increase of $200 million is a result of payments to the Canada Enterprise Emergency Funding Corporation to purchase shares to provide a source of funds for the Large Employer Emergency Financing Facility.
Mr. Chair, this concludes my overview of these estimates for the Department of Finance. My colleagues and I would be more than pleased to answer any questions the committee members may have. Thank you.
The Chair: Honourable senators, we will now proceed to questions and we will have a maximum of seven minutes each. Please ask your questions directly to the witnesses, and witnesses, please respond concisely.
Senator Marshall: Thank you, Ms. Bess, to you and your officials for being here today. My question relates to the $200 million for the Canada Enterprise Emergency Funding Corporation. The explanatory note says it’s for the purchase of shares. That’s a subsidiary of a Crown corporation. When I looked at the backup material, it looks like it’s loans and not for the purchase of shares. Could you briefly clarify that? Then I will have some additional questions.
Ms. Bess: Thank you very much. I’d like to defer that question to my colleague Evelyn Dancey, who can provide more information about the Canada Enterprise Emergency Funding Corporation and how that program works.
Evelyn Dancey, Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance Canada: Certainly. The $200 million relates to the initial capitalization of CEEFC, Canada Enterprise Emergency Funding Corporation. It is a new subsidiary created last year as part of the economic response plan within its parent Crown corporation, the Canada Development Investment Corporation, or CDEF. The purchase of shares is the means by which the Minister of Finance is exercising her funding agreement with that subsidiary, enabling the subsidiary to obtain the cash that is required to provide access to the approved borrowers under the program to the loan amounts that have been approved.
Senator Marshall: But what is being purchased? Is it shares?
Ms. Dancey: It is.
Senator Marshall: Can you forward to the committee information on the shares, such as what companies? There are four companies in the background material. When I looked at the corporation’s website, it shows there have been loans approved for over $1 billion. Has any of that money gone out yet? Is that $1 billion in addition to the $200 million?
Ms. Dancey: The $1 billion is the maximum total amount that has now been approved for the four borrowers. But the borrowers received their funding in tranches, more on the basis of their cash need. I should clarify that the share purchase is a purchase in the Crown corporation subsidiary itself. This is not the purchase of shares of the underlying borrower companies. If the disclosure is unclear, we’re happy to follow up to explain how that works.
Senator Marshall: Yes, definitely, because other people are getting the same impression. So there have been four loans approved.
Ms. Dancey: Yes.
Senator Marshall: Has any of that money been disbursed yet?
Ms. Dancey: Not the $1 billion in total because, of course, that’s an upper amount over the duration of the loans that have been approved, but there have been amounts disbursed to the borrowers.
Senator Marshall: Could you also give that to us and the terms under which the loans have been made, the interest rates, security and terms such as that?
Ms. Dancey: Yes, I can follow up with information.
Senator Marshall: Are there articles of incorporation? It’s a Crown corporation, but it doesn’t have its own legislation.
Ms. Dancey: Correct.
Senator Marshall: Are there articles of incorporation? In order to find out anything on the operations of the company, a lot of the information I got was just on the internet. Are there articles of incorporation available? Is that something else that can be provided?
Ms. Dancey: Yes, I can follow up with background available on that. The corporation was established through an order-in-council, so there is information through that avenue that is available. In addition, CDEV reports on the activity of this subsidiary in its periodic reporting, so we can put that together for you.
Senator Marshall: There is a board, a CEO and a CFO. Have the auditors been appointed?
Ms. Dancey: Yes, they have, by virtue of the same process that CDEV follows, so, again, we can follow up and provide that specific information.
Senator Marshall: And let me know who they are. Also, what would be the security over the loans? You’re going to give me the loan amounts. I got the impression that 80% of the loans are unsecured, while 20% are secured. Am I correct on that?
Ms. Dancey: Yes, essentially. Their program is actually extending standardized terms. Much of that information is publicly disclosed on the website. There is a more detailed legal agreement that exists with the borrowers, but you’ve captured the essence of it, which is about 20% of the total loan amount is secured alongside existing creditors. So current creditors have to make space for the Crown corporation to obtain security. The point of that is to allow the Crown corporation to be able to rely upon the diligence and the knowledge of those creditors. Of the total amount, 80% is unsecured, and that is in recognition of the emergency nature of these requirements and that the companies will require sufficient liquidity to operate in this bridge fashion through the emergency.
Senator Marshall: The government has the option of appointing an observer to each of the four boards of the four companies that are going to be lent money. Have observers actually been appointed to those four boards?
Ms. Dancey: To my knowledge no, but I would suggest that question is best placed with the Crown corporation that is delivering the program, in case my information is out of date.
Senator Marshall: You said those four companies have only received partial amounts on their loans, so it’s going to be over $1 billion. What kind of reporting structure is in place for reporting to Parliament on the activities of that Crown corporation? There is no statute creating the corporation. I haven’t seen the articles of incorporation. What’s the oversight and the transparency and the reporting to Parliament?
Ms. Dancey: I can speak to a few of the elements and then happy to provide more detail once again.
Every time there is an approved loan — as you say, there have been four so far — the Crown corporation, CEEFC, is disclosing that on the website, including the maximum amount and the name of the borrower. In addition, its activities are reported upon, as with the other subsidiaries of CDEV, in CDEV’s quarterly reports and annual report.
The Chair: Thank you, Ms. Dancey.
Ms. Bess, please ensure that the questions that are to be followed up in writing to the clerk will be done, and please do not hesitate if you want to share additional information, especially in relation to the last question asked of Ms. Dancey.
Senator Marshall: When can we expect that information, Mr. Chair?
The Chair: Ms. Bess, what would be your time frame for answering those particular questions?
Ms. Bess: Let me check with Evelyn.
Ms. Dancey: This information is fairly easy for us to put together. If we could have until the end of day Monday or Tuesday, I am sure we could have it done by then.
Senator Marshall: Perfect. Thank you.
[Translation]
Senator Forest: I’d like to thank the witnesses for being here. These supplementary estimates include $2.3 billion in statutory authorities to the Department of Finance for a payment to the Canada Infrastructure Bank. The funding is part of the planned $35-billion capitalization of the bank, which was announced in 2017. I am especially interested in how the money is being transferred to the bank given that the bank has been accused of being slow to approve projects.
My understanding is that the Department of Finance releases funding to the Canada Infrastructure Bank according to project approval and progress. I’m trying to figure out why the Department of Finance controls the funding that flows from the bank. Isn’t that Treasury Board’s job? Some departments have huge multi-year infrastructure budgets, such as the Department of National Defence and Public Works. Does the Department of Finance do the same thing for those departments and release funding on the basis of project progress, as is currently the case with the Canada Infrastructure Bank?
I’m not against the financial control. I’m just trying to compare how funds are transferred to the Canada Infrastructure Bank versus other government institutions, to figure out whether it’s the most efficient way of transferring the money. That’s my first question.
[English]
Ms. Bess: Thank you very much for your question, Senator Forest. Once again, I will defer to Ms. Dancey who will be able to respond in more detail.
Ms. Dancey: The role of the Department of Finance in funding — so the cash transfers required by the Canada Infrastructure Bank — represents shared governance that was established at the outset of this new entity. The Infrastructure Bank is a new model with a mandate and a set of objectives that was new to the Government of Canada, so the Minister of Finance and the Department of Finance do have this role in releasing the cash required by the bank.
Essentially, this is an efficiency motivation at the outset, as the bank was establishing itself and ramping up its activities. It would not have made sense for it to have an independent borrowing and treasury function. This was viewed as efficient. We processed requests for drawdowns quickly and efficiently. They are at the pace that the bank requires for its operation requirements, as well as the calls on its investments as it needs the cash for its investments.
[Translation]
It’s to be efficient, then.
[English]
We are always interested in ensuring the model works. Over time, we might see evolution, should efficiency require it.
[Translation]
Senator Forest: The bank was set up in 2017, so you’ve been doing it that way since then. From your experience, is that model more efficient than the traditional model of allocating funding directly to the agency or department?
Ms. Dancey: For the time being, I think so.
[English]
There is a scheduled review of the Infrastructure Bank’s legislation. It does have a five-year review. There could be a logical point to look at the arrangements that were made at the outset of the creation of the bank and see where its evolution now suggests the government should be in its governance and funding approach.
[Translation]
Senator Forest: The bank’s former CEO is now a deputy minister at the Department of Finance, so I imagine assessments are done properly.
[English]
Senator Klyne: My question is with regard to the Global Risk Institute and the department’s request for $12.5 million. I note that the Government of Canada was a founding member of this institute and relevant current members include CMHC, the Canada Infrastructure Bank, Business Development Bank of Canada, Export Development Canada and the Canada Deposit Insurance Corporation. I also see there is some presence from the Canada Pension Plan Investment Board through the National Pension Hub. First, what is this amount for? Second, it is difficult to find any financial reports or indications in an annual report, but what is the institute’s total revenue and how much of this is represented by this $12.5 million? Is it on an annual basis or one-time expense?
Ms. Bess: Thank you very much for your question, Senator Klyne. I can answer part of the question and then I will defer to my colleague Mr. Soren Halverson.
The $12.5 million is grant funding for the Global Risk Institute for a period over 10 years for financial services. It’s to allow the Global Risk Institute enhance its approaches to financial risk management and to support a sound and efficient financial sector. That is part of what that funding will be used for.
I’ll defer to my colleague Mr. Halverson to provide some more information on the Global Risk Institute itself.
Senator Klyne: Is that $12.5 million paid out over 10 years or a one-time $12.5 million?
Ms. Bess: I think it was paid up front, Senator Klyne. I’ll ask Soren to clarify that.
Soren Halverson, Associate Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance Canada: In respect of the structure of the payment, it is a lump sum payment intended to cover 10 years of operating expenses. I do not have the figures as far as the total revenues of the organization are concerned. I will undertake to find out what I can get in that regard to provide to this committee.
Senator Klyne: Thank you. It has good representation of memberships across the traditional financial pillars. I want to get some sense that they are also helping carry the can here.
Senator Richards: Again, I’m asking a question that you might not be able to answer. Perhaps you can get back to me on it.
There is $1.6 billion going to Indigenous Services for testing, contact tracing, purchases of protective gear, medical equipment and supplies. Yet, today on CBC, we saw a young woman living in a makeshift shack with blankets over the walls to keep herself and her two young children warm. This is nothing less than tragic. There are so many problems with housing and water in First Nations territories. What percentage of monies will be used to rectify any of this during such a dangerous pandemic, or is this considered a completely separate matter under Main Estimates? Might anyone have an answer? If not, could you please get back to me on that?
Ms. Bess: Thank you very much for your question, Senator Richards. That is not an amount that is included in our Supplementary Estimates (C). That is probably a question for Indigenous Services. We could follow up with Indigenous Services to get an answer. I don’t have an answer for that, unless one of my colleagues around the table could answer that right now.
Senator Richards: Could you follow up with Indigenous Services and get back to me on that? Thank you very much.
The Chair: Ms. Bess, is there an agreement that you will verify?
Ms. Bess: Yes, certainly.
The Chair: Thank you.
Senator Smith: One of the major problems with the estimates process during the COVID-19 pandemic is trying to identify the source of various spending authorities. As noted by the Parliamentary Budget Officer, many bills were introduced over the last year that granted federal departments temporary spending authorities. Therefore, they did not have to seek approval through the detailed estimates process. The Department of Finance had been providing biweekly spending updates since the beginning of the pandemic, but abruptly ended the practice this past summer.
Why was that practice halted? Does the department intend to go back to providing those updates on a normal basis?
Ms. Bess: Thank you very much for your question, Senator Smith. I will defer to my colleague Mr. Bradley Recker from Fiscal Policy, who may be able to provide more information about that reporting.
Bradley Recker, Director General, Fiscal Policy Division, Department of Finance Canada: Yes, early on in the pandemic, we passed a couple of bills. They are all listed within the estimates with respect to getting rapid authority for COVID measures.
Until August, we had been providing to the House Finance Committee, which was under one of those pieces of legislation, an update every two weeks on new planned spending initiatives, many of which were going through that legislation. That legislation expired in September 2020 and we didn’t return to reporting through that mechanism.
Any new funding after that September period had to go through a piece of legislation where it was detailed in a schedule or it was folded into the estimates, either Supplementary Estimates (B) or Supplementary Estimates (C).
Senator Smith: Do you think that exercise or shift affected the efficiency of the Department of Finance’s control of the flow? I’m trying to get a sense of transparency and the efficiency of the operation, because sometimes when you go from one method to another method — and we understand the challenges of the pandemic. But you have a huge operation that you’re managing and I’m trying to understand; was there an efficiency lapse because of this change?
Mr. Recker: I don’t know if there was an efficiency lapse. It was certainly difficult. Clearly, most annual funding is provided through the estimates. We had these two other pieces of legislation that provided specific authority for quite a few COVID-related measures. In terms of efficiency in getting money out the door quickly, this was clearly extremely effective. You think of programs such as CERB or other major programs. It was certainly a challenge from the department’s perspective, but absolutely necessary.
Senator Smith: Will you be doing any post-mortem on what transpired, so if there is an opportunity to improve efficiencies, you can actually institute that?
Mr. Recker: For sure. We have done a bit of that already. I believe the Auditor General will be looking into the use of that appropriation and the way it progressed, and reporting on it in the coming months.
Senator Smith: Thank you.
[Translation]
Senator Dagenais: My question is for all the witnesses. I’d like to hear your comments on Transport Canada. All the industry observers and transportation carriers have united in criticizing the department’s political handling of the aviation and aerospace sector, in particular.
What can you tell us about why Canada is the only major country that did not provide tangible support to the sector?
Let’s talk about Air Canada, which received no support and did not refund tickets bought by passengers before the pandemic. Thousands of passengers have ticket credits but are being told by the government not to travel. I’m sure you’ll agree it’s a rather strange situation.
What can you tell us about Transport Canada and its handling of the aviation sector?
Ms. Bess: Thank you for your question, Senator Dagenais.
[English]
For that question, I’ll refer you to my colleague Ms. Evelyn Dancey from the economic development group to answer that question because we have had discussions with Transport on this issue.
[Translation]
Ms. Dancey: As someone who works at the Department of Finance, I can’t say a whole lot about Transport Canada’s management of the aviation sector.
[English]
This being said, the government certainly has been proceeding with its announced intentions in the Fall Economic Statement to work with the air sector, including the large carriers, in terms of financing that might be required throughout the extraordinarily difficult time that COVID has created for them. The Fall Economic Statement did include various funding measures under the purview of Transport Canada and regional development agencies to support airports and regional connectivity.
The government has announced in the Fall Economic Statement that it has commenced its discussions with large carriers. Those are confidential as they relate to the individual needs, forecasts and outlooks of those companies, so no details could be disclosed on those. However, I can certainly assure the senator that this work continues as was outlined in the Fall Economic Statement.
[Translation]
Senator Dagenais: It always strikes me as odd when the word “confidential” is used in relation to taxpayer money. Now I want to discuss taxes. Ms. Bess, it’s income tax filing time for Canadians, so I’d like to know what impact you are expecting the lack of business revenue to have. I’m referring to businesses that have been in dire financial straits for a year now.
[English]
Ms. Bess: Thank you for the question. I’ll refer you to Mr. Miodrag Jovanovic for that question.
Miodrag Jovanovic, Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance Canada: Given that this relates to the overall revenue implication from more of a macro standpoint, I wonder if my colleague Mr. Brad Recker would be better placed to answer.
Mr. Recker: My apologies. Would you mind repeating that?
[Translation]
Senator Dagenais: With so many businesses in financial turmoil for a year now, tax refunds will be minimal at best. What do your forecasts say about businesses’ finances? As everyone knows, numerous businesses are struggling financially because of the pandemic. How are you planning to address the lack of funding businesses are facing?
[English]
Mr. Recker: I’m not sure that I can speak to the financial safety with respect to those companies. We have several programs that are set up, many of which are definitely helping out the corporate sector.
With respect to revenues, overall, our corporate income tax revenue forecast for the current year is down in double digits. We’re expecting a significant decline in overall CIT revenues as a result of the unexpected drop in corporate profits.
But in terms of support to the sector, we have Canada Emergency Business Account, which has provided roughly $45 billion to the sector at this point. As well as the CEWS, the Canada Emergency Wage Subsidy, which is providing or more than $60 billion at this point and is expected to provide at least $80 billion in this fiscal year.
I don’t know if that answers the question.
The Chair: Senator Dagenais, do you have a follow-up question?
Senator Dagenais: No, thank you.
Senator Galvez: Thank you to the witnesses for being with us and answering our questions.
Last year, this committee ran a study on the COVID-19 pandemic response. We received several briefs from a variety of organizations and individuals that expressed very interesting concerns regarding the transparency and accountability regime surrounding EDC, Export Development Canada. Among them, there was a submission from Environmental Defence, Above Ground and Oil Change International, and they said:
EDC is not funded from government coffers. Instead, the agency finances its operation from its revenues. If EDC were unable to make good on its obligations, however, ultimately the Government of Canada — and therefore taxpayers — will be on the hook.
It is unclear how the agency screens potential clients for environment and social risks, including risks of climate harm and human rights violations. EDC rarely discloses details about why it chooses to support a company despite such risks and what preventative measures, if any, it will insist on as a condition for support. A government report prepared as part of the parliamentary review of the Export Development Act confirmed that the agency’s disclosure practices are deficient.
I have one question with respect to that. I would like you to explain how EDC, whose risky investments pose a risk to taxpayers, is screening potential clients for environment and social risk, including whether an investment may impact the government’s ability to meet its emissions reduction obligation.
After that, I have two questions triggered by the questions of my colleagues Senator Marshall and Senator Forest.
Ms. Bess: Thank you very much for your question, Senator Galvez. Unfortunately, I don’t have all of the details around how EDC assesses its investments. I’ll defer to my colleague Ms. Dancey to see if she has more information on that; otherwise, we’ll have to take that one back.
Ms. Dancey: I would suggest we ask our colleague Katharine Rechico.
Katharine Rechico, Assistant Deputy Minister, International Trade and Finance Branch, Department of Finance Canada: EDC has an environmental and social framework that they follow in terms of how they choose projects to go forward with, and that would be available on their public website. However, I would defer to Global Affairs Canada and, more specifically, the Minister of Trade, as EDC falls within her portfolio, not the Minister of Finance.
Senator Galvez: To carry on from the question of Senator Forest, I would like to know the differences in the ways that the Infrastructure Bank operates compared with EDC and the Development Bank of Canada.
This is a follow-up on the question of Senator Marshall. It’s true that there are four companies that have been agreed to for loans, the Large Employer Emergency Financing Facility. On the website, they’re called covenants. The “. . . borrower will be subject to certain affirmative covenants while the loan is outstanding, including . . . .” several points. Then later, it says:
. . . The borrower will be subject to certain operating requirements while the loan is outstanding including (i) prohibitions on dividends, capital distributions and share repurchases, and (ii) certain executive compensation restrictions. . . .
So as part of the information that you’re going to bring for Senator Marshall, can you please provide copies of the loan agreements, specifically, these covenants I just described?
Ms. Bess: Certainly, Senator Galvez. We can look into that and bring that back with the other information we were going to report back to Senator Forest.
Senator Galvez: Thank you.
The Chair: To follow up, Ms. Bess, this would be hopefully by the end of next Monday?
Senator Galvez: That would be great.
Ms. Bess: Yes.
The Chair: Thank you.
Senator M. Deacon: Thank you all for being here this afternoon. My question concerns the Canada Emergency Wage Subsidy. It’s actually a follow-up to an answer that was delayed but which we received from Finance yesterday. So thank you for sending that, reminding us of the questions that we do ask.
I understand that when crafting the CEWS, time was tight, it was important to get it out the door, conditions weren’t put in the program; the timing and the urgency was so very important.
In the meantime, we have seen that our major telecom companies have taken the subsidy while also giving dividends to its shareholders over time. Rogers accepted $82 million in wage support and Bell accepted $129 million in wage support, and they paid the shareholders over $1 billion and $3 billion, respectively. What is confusing me more is that companies have also announced massive layoffs over the last week; at Bell, more than 200 people lost their jobs.
At this point as we move forward, is there any type of monitoring mechanism in place to see how these companies are spending the wage subsidy, again, completely respectful of the process that had to come forward? Is there any way we can clawback the subsidy in light of these dividend payouts, or would that require another line of new legislation?
Ms. Bess: Thanks very much for your question, Senator Deacon. It’s a good question. My colleague Mr. Jovanovic can respond to that.
Mr. Jovanovic: Thank you for your question.
So, first of all, at the outset, you mentioned the importance of getting the money out. The wage subsidy was designed to be very responsive. It was designed in a manner so that an employer’s eligibility would be based on a revenue reduction, assessed on a monthly basis. Again, the primary purpose here was to have something responsive enough for the drastic change in demands and business activities coming from restrictions due to the nature of the crisis. That was instrumental.
It would probably also have created a significant amount of uncertainty for claimants if one of the conditions were to be based on the future financial position of the claimants. I think that has to be taken into account as well. It could have created uncertainty to the point where it could have under undermined the effectiveness of the program.
That’s to explain the circumstances and the reason why the program has been created that way.
Given these eligibility conditions, assessed on a monthly basis, it’s not unexpected that you will see cases of firms whereby, after the fact, they may be in a stronger financial position than expected but still having received the wage subsidy. This is not unexpected given the way it was designed. But there were good, clear reasons why, as I explained.
To get back to your other question as to whether it would require legislative change to do anything — to, let’s say, recapture or change the way the program works — the short answer is yes, it will require legislative change. That’s the extent of my answer. Thank you.
Senator M. Deacon: Thank you for that answer.
My second question looks a little differently at the federal transfers to the provinces and territories in light of the pandemic. A recent study by the Canadian Centre for Policy Alternatives found that the provinces still have a lot of potential funds on the table. Programs like the essential worker wage top-up, for instance, were not taken up by a number of provinces to the extent that, perhaps, they could have. It’s my understanding that they simply didn’t apply for the maximum amount of funding. There could be a number of reasons for this, but from your end, have you looked at why this might be? Have you looked at anything that your department might do or could have done differently that would have seen a greater uptake from the PSOs and TSOs on some of these programs?
Mr. Jovanovic: Thank you. I hate to do this, but I believe that if it’s a question of transfer to provinces and the extent to which they used the money that they received, I wonder if Mr. Galen Countryman may be better placed to answer.
Mr. Galen Countryman, Director General, Federal-Provincial Relations, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: I can try to answer that question. There were a number of transfer programs to provinces and territories as part of the COVID response, including the essential workers top-up fund, the Safe Restart Agreement and the Safe Return to Class Fund administered by the Department of Finance. These funds are basically transfers directly to the provinces and territories that go into their general revenues.
In the case of the Essential Workers Support Fund, provinces were required to submit a proposal for funding to draw down their share of the fund. All provinces have submitted proposals, to a certain extent, and have drawn down funding. There is one proposal that we are currently considering right now for funding, but otherwise we have paid out over $2.5 billion of the $3 billion we have set aside for that fund.
For the other funds, such as Safe Restart Agreement, they are paid out and they go into their revenues. A lot of the Safe Return to Class Fund and Safe Restart funding was provided in September. Provinces may be rolling that money out over time. But it is up to the provinces to determine how and when they spend the money once they receive it.
Senator M. Deacon: I’ll leave that for now.
Senator Boehm: I would like to thank the officials of the Department of Finance for joining us today. I don’t know which of you will want to answer this one, but I’ll ask it, of course.
A major part of the funding from the supplementary estimates is dedicated to economic responses to the pandemic, of course. However, that also includes support for small- and medium-sized businesses. Small- and medium-sized enterprises comprise the vast majority of hotels in Canada. During this past year, the hotel industry has taken a very hard hit in the context of the tourism industry slowing down. Has the government considered reaching out to some of the small- or medium-sized-hotel owners, who have been struggling to keep their businesses afloat at this time, in the selection of their hotels as part of the mandatory hotel stopover for those who are coming back to Canada? It seems to me that this could be a good opportunity to provide some revenue to the small- and medium-sized businesses that are in much need of it.
Ms. Bess: Thank you for your question, senator. I think this might be a question that my colleague Ms. Dancey can respond to. If not, then perhaps one of my other colleagues.
Ms. Dancey: I’ll just confirm that this is not a topic I know about, if I’m understanding correctly. This relates to the requirements upon individuals entering Canada following travel abroad, and I am not aware of the provisions of accommodations.
Senator Boehm: Okay, the question is really to do with how the government supports SMEs in the hotel sector. There are a lot of different programs, and we know what they are. It also relates to the question asked earlier by my colleague Senator Dagenais in terms of the transport industry more generally speaking, so if we could have some thoughts on that, it would be great. If there is any data, I’m sure we would welcome it.
The Chair: Ms. Bess, do you have any comments on the statement that has been made?
Ms. Bess: My colleague Mr. Miodrag Jovanovic has something to add.
Mr. Jovanovic: I would add that the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy programs were quite instrumental in supporting SMEs in all sectors across Canada, particularly those greatly affected in the accommodation and food sector industries. To the extent it may help provide some perspective on the answer, I can say that if we look at the accommodation and food service sector, as of February 14, I believe, there have been about 276,000 applications for the wage subsidy, for instance, for a total subsidy of about $4.7 billion.
I don’t have the breakdown for the rent subsidy, but I wanted to give that perspective. Thank you.
Senator Duncan: Thank you to all the witnesses that have come before us today. I believe my question is directed to Mr. Countryman. It follows up on the line of questioning from Senator Deacon regarding the major transfers from the federal government to provinces and territories.
We know, for example, the Treasury Board program that we just discussed — COVID-19 under Canadian Digital Service. That program is not accessed by the territories, for example. I’m not positive that it’s accessed by all of the provinces. My point is that there are varied needs and there is varied uptake across the country.
The federal government, recognizing this, will have specific pockets of money or transfers. For example, in Finance we see a transfer to the Province of Newfoundland and Labrador. In CIRNAC, we see a transfer of $68.2 million for something called “social and political development in the North and for Northerners.”
In your capacity of managing the federal-provincial transfers, is there an Excel spreadsheet with which we can track all of these various transfers and different pockets of money being transferred to provinces and territories? Or do we have to wait for the Auditor General to give us a report on this? If we do not, it would make sense to me to have this information available so that when provinces like Prince Edward Island want to initiate a program like a basic income guarantee, the cabinet ministers who have that knowledge can say that different provinces and territories have been funded under these different programs, and these are the amounts of money going out.
Where is the tracking of the federal-provincial transfers and all the different labels those transfers go out under? I hope that made sense, Mr. Countryman.
Mr. Countryman: I think I understand your question. From the Department of Finance, we have four major transfers: Equalization, Territorial Formula Financing, Canada Health Transfer and Canada Social Transfer. They are the big four. As you’ve mentioned, there are many other transfers that are administered by other departments. Where would that all be rolled up? I have to verify whether the Treasury Board Secretariat has something on their open data website that may have a roll-up of all transfers to provinces and territories. Within Finance itself, we would only be tracking the four major ones that we administer.
Senator Duncan: Could we have that information in writing, the four major transfers and what they look like to each of the provinces and territories?
Mr. Countryman: For the current year, yes, we can get you that table.
Senator Duncan: And the previous; pre-pandemic as well as during the pandemic. Thank you.
Mr. Countryman: A lot of that information is on the Department of Finance website under major transfers to provinces and territories. It’s all public information for those four transfers.
Senator Duncan: We can gather it then. Thank you.
Senator Loffreda: Thank you to Finance Canada and our witnesses for being here. In the Supplementary Estimates (C), the Department of Finance is forecasting a decrease of $107 million in interest on unmatured debt and $25 million in interest payments for other interest costs. My question is referring to the Parliamentary Budget Officer’s report blog posted on January 26, 2021, illustrating the increased sensitivity of public debt charges to interest rate shocks and the government’s plan to borrow at longer maturities, which is a wise decision to lock in historically low interest rates as well as enhance the predictability of debt servicing costs. Given the now-increased predictability of debt service cost, what is the estimate for 2020-21? What percentage of total government spending is debt service costs, and how does it compare to previous years and with future years in forecast, just to be certain that these debt levels are not a concern and the debt servicing cost at these debt levels are not a concern going forward? Thank you.
Ms. Bess: Thank you very much for your question, Senator Loffreda. My colleague Bradley Recker would be able to respond to that in terms of the debt servicing cost.
Mr. Recker: Yes, it’s true. What’s included in the estimates is the change from our last forecast for the outlook for 2020-21. The previous forecast in previous estimates documents would have been based on the July snapshot that was put out by the department and the total debt charges that were expected at that time. Between the snapshot and the Fall Economic Statement, there was a small decrease in expected interest rates for government short-term and long-term debt for 2020-21. That’s why you see a small decrease in our expected debt charges. Overall, in 2020-21, despite a very large financial requirement and increased borrowing, we are actually seeing a decline in debt charges relative to the previous year, in the range of $4 billion, just because interest rates have dropped to historic lows.
With respect to debt charges overall, they are down to around $20 billion from about $24 billion from the year prior. That’s about 0.9% of GDP, which is a 100-year low. So despite the fact that our borrowing has gone up quite a bit, the decline in interest rates that has occurred over the past year has driven those borrowing costs to historic lows.
Looking forward, we base our debt charge forecast on a survey of private sector forecasters that will forecast both short- and long-term rates for us over the next five years. We are expecting interest rates to climb by a little more than 100 basis points over the five-year forecast horizon. Debt charges will rise because of that, but not to anything substantially too great. We’ll still remain near historic lows as a share of GDP. With respect to where we’ll end up, it’s probably in the 1.2 percentage-point range, which is well below historic averages and very close to the 100-year low.
Senator Loffreda: I’m curious about the $25 million of interest. Thank you for the response. There is no concern on the debt service cost going forward because of the historic low interest rates. You mentioned the percentage of GDP, but as a percentage of government spending — and on the $25 million on the reduction of other interest costs, I’m just curious what other interest costs besides unmatured debt we have.
Mr. Recker: Those are related to our long-term pension obligations, other interest costs. Again, there is interest against those, and those are falling as well. I don’t have the number offhand as a share of overall spending; I can find that. It will be at quite historic lows as well. It would be really historic lows right now, given how much we are spending in the current fiscal year just because of the COVID-19 response. But over the horizon, I imagine it would also be near historic lows. I can get that, but I don’t have it offhand.
Senator Loffreda: It would be nice to have a number on that.
To follow up on Senator Klyne’s question on the Global Risk Institute, I know, having been in the banking industry for 35 years, we would mention the Office of the Superintendent of Financial Institutions, or OSFI, on a daily basis and had great relations. I’m just wondering about the $12.5 million investment in the Global Risk Institute. Could you elaborate the necessity of that? Given the strength of our financial sector, the oversight OSFI has over our financial institutions and the great job it has done historically, where does the Global Risk Institute come in? Just to link that $12.5 million investment with the GRI.
Ms. Bess: Thank you very much. I’ll defer to my colleague, Mr. Halverson from Financial Sector Policy Branch.
Mr. Halverson: Thank you for that question. The role of the Global Risk Institute is very much a research and convener role. Whereas OSFI plays a regulatory role, and specifically in respect of federally regulated financial institutions, the purview of the Global Risk Institute would be somewhat broader. It might contemplate areas of risk that are outside of the regulatory perimeter at this point in time. I suspect what you would see from a subject matter perspective is a broader scope and work that might get at interests of the membership that extend beyond what OSFI would be considering at any point in time.
Senator Loffreda: Thank you. Mr. Chair, if there is another round, I have a supplementary question.
Senator Pate: Thank you to all the officials. Your Supplementary Estimates (C) include funding for the Canada Recovery Benefit and Canada Recovery Caregiving Benefit, which the Prime Minister has recently committed to extending.
Earlier this month, in its report on pre-budget consultations, the House of Commons Finance Committee cited witness testimony explaining the importance of such income support measures and called for the consideration of a permanent guaranteed livable basic income. In addition, the premier of P.E.I. has indicated a desire to initiate measures of this sort.
What measures will the Department of Finance be taking to consider this recommendation ahead of the upcoming budget and the consideration, in particular, of the request by the Province of Prince Edward Island?
Also, in light of the number of Canadians not being served by any of the benefits, how will you be conducting a GBA+ in order to ensure that you’re monitoring — particularly with respect to gender, race and disability — who is not benefiting from the current benefits of those 1 in 10 or 1 in 7 Canadians, depending on which source you use, who are not being supported and live under the poverty line in Canada?
Ms. Bess: Thank you, Senator Pate. I think this would be a question for my tax policy expert, Miodrag Jovanovic.
Mr. Jovanovic: Thank you. I believe the question seems to relate to basic income and income support, particularly provided during the crisis, with reference being made to the Canada Recovery Benefit and the gender-based analysis on that. This is primarily a responsibility of Employment and Social Development Canada, so in that context, perhaps I can first turn to my colleague Galen Countryman to see if he has anything to add.
Senator Pate: If I may, I’m also looking at what projections are being looked at for the upcoming budget with respect to these issues. Thank you.
Ms. Bess: As for projections in the budget, I think my colleague Bradley Recker may have some information on that; I’m not sure if Mr. Countryman is still on the line.
Mr. Countryman: I am here.
Ms. Bess: We’ll go to Mr. Countryman first.
Mr. Countryman: Thank you. On the question of the Canada Recovery Benefit, as my colleague mentioned, that is primarily the responsibility of Employment and Social Development Canada. I would defer questions to them, in particular with respect to what gender-based analysis they conducted.
In terms of proposals for the upcoming budget, the ministers have been doing pre-budget consultations to take into account all kinds of proposals to deliberate on the budget. It’s not for me to speculate on what the outcome of the budget deliberations would be.
The Chair: Senator Pate, is that satisfactory?
Senator Pate: I was asking if, in fact, there has been any costing of those measures in terms of both the recommendation from the House of Commons Finance Committee to develop a guaranteed livable basic income and the request from P.E.I., and whether any of that has been budgeted in anticipation.
The Chair: Ms. Bess, can you take it under advisement and come back to us through the clerk?
Ms. Bess: Yes, I can Mr. Chair.
Senator Pate: Thank you.
The Chair: Before we go to a second round, I have a question, with the indulgence of all the senators. Ms. Bess, I want to come back to Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures. It basically enacted the Canada Infrastructure Bank Act to create the Canada Infrastructure Bank as a Crown corporation in June 2017. In the supplementary estimates that you are looking at, you have identified $2.2 billion. I have two questions. First, for clarity, what is the operational relationship between the Canada Infrastructure Bank and the Department of Finance? Second, since we saw the enactment in 2017 for the Infrastructure Bank, what is the size of the public infrastructure deficit in Canada, and where is the funding gap greatest across Canada?
Ms. Bess: Great questions, Mr. Chair. Thank you. I will defer to my colleague Ms. Evelyn Dancey to see if she can expand on the relationship and provide data for you.
Ms. Dancey: With respect to the operational relationship, the Canada Infrastructure Bank is, of course, within the portfolio of the Minister of Infrastructure and Communities. It is Infrastructure Canada that is the lead department in terms of managing the relationship with that Crown corporation.
The Crown corporation, like any other that I’m sure the senators would be familiar with, is subject to the preparation of the annual corporate planning process. The Minister of Infrastructure and Communities must recommend the corporate plan to the Treasury Board for Treasury Board approval on an annual basis of operating and capital budgets.
The Minister of Finance’s recommendation is required on that corporate plan, as it is for a number of other large corporate plans, particularly for the financial institution, the financial Crown corporation. So there is that element in terms of the Minister of Finance’s role.
Otherwise, our relationship is that which I spoke to previously in terms of being the back office treasury and assisting the CIB with respect to its cash requirements through drawdowns that are managed by the Finance Department’s corporate services branch.
The Chair: And when we look at the size of the public infrastructure deficit of Canada, can you apprise the committee of that?
Ms. Dancey: This is a very significant and important question and one, of course, that government officials are studying, I think, at all levels of government. This is beyond my area of immediate expertise. It’s probably a question better for Infrastructure Canada. But this being said, we would be happy to go back with our colleagues and make your interest known and seek to follow up.
The Chair: Ms. Bess, who could answer that question?
Ms. Bess: Ms. Dancey would help me coordinate that, so I defer to Ms. Dancey just to provide a time frame. I’m not sure what that would be.
The Chair: What would be the time frame, as we are looking at March to table our report?
Ms. Dancey: I think it would be best if I could follow up with my counterparts at Infrastructure Canada and we could follow up with the clerk. I don’t want to speak on their behalf about how long that would require.
The Chair: Thank you very much. Now we will move on to the second round.
Senator Marshall: My question is for Mr. Recker. It’s a follow up to Senator Smith’s question about the COVID-19 biweekly reports. We are not through the pandemic yet. Is it the intent of the Department of Finance to start providing those reports again? Before you answer, I would like to say that those reports were very helpful. When the Department of Finance discontinued them, it left a big gap. We couldn’t understand why they were discontinued, but there was an article in the media a while ago that indicated there were some political staffers. They said in the PMO and another minister’s office that they didn’t want to provide too much information to people because it would raise questions. I wanted to make you aware of that before you answer.
We have asked the President of the Treasury Board, the Minister of Finance and the Leader of the Government in the Senate. We have included a recommendation in two National Finance Committee reports all asking for that report to be reinstated.
With that background, Mr. Recker, is there a possibility we could start getting those reports again on a biweekly basis?
Mr. Recker: We currently don’t have a plan to restart those reports. Those were a massive undertaking for the department, actually. It took a large amount of effort to provide them.
Since that time, we have had the Fall Economic Statement, which had a tremendous amount of detail of all of the planned COVID spending measures that the government has put in this year. The vast majority are in place at this point. For the federal Department of Finance, planned spending is where we dedicate most of our resources. We have those and that’s in place.
From a reporting standpoint, typically we report The Fiscal Monitor.
Senator Marshall: Could you bring back to your minister that of all the reports produced by government that nobody reads, the COVID-19 biweekly reports were actually read by a lot of people — it was very enjoyable reading — and I would like to have them reinstated. Thank you very much.
Mr. Recker: Thank you. I take that as a tremendous compliment, and the folks who worked hard on that would as well. I’ll take that back for sure.
Senator Marshall: Thank you.
Senator Richards: Ms. Bess, I don’t think I will need your answer, because I didn’t realize that Indigenous Services Canada will appear on Monday. I will ask the same question about the supplemental and get an answer from them. Thank you very much anyway.
Senator Loffreda: Infrastructure is important to our relaunch for the economy going forward, especially after the pandemic. My question is about the Canada Infrastructure Bank.
Although there has been a lot of discussion about the Canada Infrastructure Bank, when I look at their website, it states that they are currently participating in 13 projects, including REM and Contrecœur Port Terminal in Montreal. Beyond these 13 projects, is Finance in a position to provide our committee with a list of applications that the bank has received thus far? How many applications have been refused? Are there any in process that have been refused? How many are currently under review?
I read that last fall, the Canada Infrastructure Bank underwent a policy change eliminating the requirement for the bank to secure approval directly from the Department of Finance Canada, as we discussed. Does the bank have the freedom and independence to approve and reject projects without any political interference from the government to ascertain they’re being done for economic reasons, not for political reasons, and for the good of our relaunch and our economy?
Ms. Bess: Thank you for the question, senator. I think Ms. Dancey is willing to respond to that question.
Ms. Dancey: I’ll address what I can from that question. I certainly understand the interest of senators in the Canada Infrastructure Bank.
The bank representatives themselves would be best placed to speak to their day-to-day operations. It is beyond the purview of the Finance Department. I wouldn’t have access to the type of information you have asked about in terms of projects received and acceptance rates. That would be for the CIB.
I can speak at a high level and without prejudice to the leadership of Infrastructure Canada as the portfolio department. In general, the Crown corporation has the ability to act within its legislated mandate and according to its investment policies established by its board and the authorities that are provided by the Treasury Board through that corporate planning process. While the bank has been evolving in the past three to four years, it is coming into stride. As you’ve noted, it has 13 projects it’s currently involved in, as well as an ambitious growth plan that was announced last fall. It operates with independence with respect to the selection of projects but is bound by its legal mandate and authorities from the Treasury Board.
Senator Loffreda: Thank you.
The Chair: Honourable senators, this concludes the time we have for the panel from the Department of Finance.
Ms. Bess and your officials, thank you very much. I think you have noticed that we all have a common denominator, which is transparency, accountability, predictability and reliability for Canadians. If you could please follow up as soon as possible, through the clerk of the committee, on questions that were asked. Thank you very much for your professionalism.
Honourable senators, our next meeting will be on Monday, March 1, at 1 p.m. EST. That said, on behalf of all senators, I would like to take this opportunity to thank the clerk, the analysts and all the support staff that permit us to do our job as senators. It is highly appreciated.
(The committee adjourned.)