Second Reading, Appropriation Bill No. 2, 2022-23
Thank you, Senator Gagné, for your comments on Bill C-24.
I would like to make a few comments as critic. Just to start off, I want to make the point that Bill C-24 is supported by the Main Estimates. The Main Estimates for this year outlines almost $400 billion in budgetary spending authorities. Of that spending, $190 billion requires approval by Parliament, while $207 billion — or more than 50% — has already received parliamentary approval by legislation other than appropriation bills.
I’m going to comment on that later.
These Main Estimates also support the interim supply bill, Bill C-16, which we approved on March 31. The interim supply bill is actually an advance of the Main Estimates, which will allow the government to operate until June 30 when the main supply bill is expected to be approved by Parliament. Of the $190 billion, $75 billion outlined in the Main Estimates has already been approved by Appropriation Bill No. 1, and this bill, Bill C-24, requests approval of the remaining $115 billion.
Since the budget was tabled on April 7, these Main Estimates do not include any of the new budget initiatives. As senators are aware, these two spending documents, the Main Estimates and the budget, outline two different spending plans by the government. This mismatch or misalignment of the Main Estimates and the budget has been a problem for many years, yet the government is taking no action to align their two spending plans.
The problem is further compounded by the 2022-23 Departmental Plans, which were tabled March 2, because they do not include any information on the new budget initiatives. Readers and parliamentarians are left with the question of what the performance indicators are for the new budget initiatives. In other words, we’re expected to approve the funding for new budget initiatives even though they do not know what the funding is supposed to achieve.
The $190 billion being requested in these Main Estimates is 50% higher than the $126 billion requested in 2019-20, the last fiscal year preceding the pandemic. The increase of $64 billion represents an increase of 50% compared to 2019-20, which clearly indicates that government spending has not returned to pre-pandemic levels.
I remain concerned that there is no process for the systematic review of statutory expenditures. Over 50% of the expenditures outlined in the Main Estimates are already approved by existing legislation. While officials testifying at the Standing Senate Committee on National Finance are sometimes questioned on statutory expenditures, a systematic review would be beneficial. I have written the steering committee of the Standing Senate Committee on National Finance, requesting that we initiate a special project to study statutory expenditures. I am hopeful that, with the support of my colleagues on the committee, we can make recommendations to correct this problem.
In addition to statutory expenditures, there are other items that fall outside of the voted and statutory expenditures. Last year, these other “items not included in the estimates” — that’s the name they are given — totalled $100 billion and were not subjected to review by the Standing Senate Committee on National Finance. Parliamentarians would also benefit from a review of these other “items not included in the estimates.”
The Parliamentary Budget Officer, in testimony before the Standing Senate Committee on National Finance, expressed his concern that, contrary to a government statement, the Main Estimates do not represent the government’s spending plan as it fails to include any of the new measures outlined in the budget — nor do the Departmental Plans include any budget initiatives. He said that the Main Estimates hinder our ability to understand and scrutinize the government’s funding requests, to track new policy initiatives announced in the budget or to identify the expected results of new budget initiatives.
I agree with his concerns.
Because the Main Estimates do not include any new budget initiatives, we have to search Supplementary Estimates (A), (B) and (C), trying to identify which new budget initiatives are being funded. If Supplementary Estimates (A), (B) and (C) do not identify the budget initiatives as such, it is simply not possible to track these items.
For example, last year, Budget 2021 identified over 200 budget initiatives for the 2021-22 fiscal year at a cost of $49 billion. However, by the end of last year, we were told by Treasury Board in the final estimates document that $36 billion of the $49 billion had been funded, leaving us to wonder what happened to the remaining $13 billion.
The Parliamentary Budget Officer indicated that he supports the all-party recommendations of the House of Commons Government Operations and Estimates Committee to remedy the mismatch of the budget and the Main Estimates.
The recommendations include the following: First of all, Parliament should establish a fixed tabling date for the budget, and the tabling date should be early enough to ensure that the budget measures are included and incorporated in the Main Estimates. Also, the Departmental Plans should be tabled at the same time as the Main Estimates.
These changes would be consistent with the recommendations the Parliamentary Budget Officer made earlier this year, which include moving the publication date of the Public Accounts to no later than September 30. Last year, we didn’t get the Public Accounts until about December 20, just before we adjourned for Christmas. So we waited nine months for the Public Accounts. We really need to have that document.
What I find in the Senate — I guess with all of government — is that there is a lot of attention given to the estimates and the budget. However, those are just plans. When the Public Accounts are released and provide the actual numbers, nobody looks at them. So we concentrate on all the planning documents to talk about how wonderful they are, but nobody ever looks at the Public Accounts to ask what exactly was spent or look at the Departmental Performance Reports and ask what exactly the money achieved. So we really should have those Public Accounts earlier in the year — September 30 would be good — and then we could use them when we do our review of Supplementary Estimates (B).
The other recommendation that the Parliamentary Budget Officer made was to require that the Departmental Results Reports be published at the same time. This year, I was asking where they were right up until we adjourned for Christmas. I think they were tabled probably February 2, so we waited quite a while for the Departmental Results Reports. But this is the information we need in order to do a good review of the Main Estimates and all the supplementary estimates when we conduct our review.
Overall, the Parliamentary Budget Officer is of the view that these changes would create a cohesive, intuitive and critically transparent financial decision-making process for legislators.
In his report on this year’s Main Estimates, the Parliamentary Budget Officer highlighted the cost of three federal programs. Senator Gagné already mentioned them, but I wanted to mention them again because of the amount of money involved.
First, federal spending on elderly benefits, including Old Age Security, Guaranteed Income Supplement and other allowance payments, are expected to increase over the next four years from $68 billion in this fiscal year to $86 billion in 2026-27. Those elderly benefits are statutory payments, and given the significant cost of the programs and the projected increase over the next four years, it supports my opinion that more time should be spent studying statutory payments.
The second area highlighted by the Parliamentary Budget Officer is federal spending on health. The Canada Health Transfer is the largest federal transfer to provinces and territories, and it provides financial assistance to help pay for health care. It’s calculated to automatically grow in line with the three-year moving average of nominal gross domestic product growth, with a minimum annual growth rate set at 3%. The Canada Health Transfer is also allocated to all provinces and territories on a per-capita basis.
The Canada Health Transfer is set to increase from $45 billion in 2022-23 to $56 billion in 2026-27. Those payments are also statutory.
Earlier this year, Canada’s premiers asked the federal government for a $28 billion increase in federal transfers, which is significantly more than the $11 billion increase projected over the next four years.
The third area highlighted by the Parliamentary Budget Officer is Indigenous spending. Indigenous-related spending in 2017-18, before the creation of the two new departments, was $14.5 billion. These Main Estimates are proposing Indigenous-related spending of $45 billion: $6 billion for Crown-Indigenous Relations and Northern Affairs Canada and $39 billion for Indigenous Services Canada. Of the $39 billion for Indigenous Services Canada, $22 billion is for out-of-court settlements, while $20 billion of the $22 billion is for compensation for First Nations children.
While the Main Estimates indicate that $45 billion is requested, the recently tabled Supplementary Estimates (A) indicate that these two departments are requesting an additional $3.5 billion. In its study of the Main Estimates, which supports Bill C-24 and the first appropriation bill, Bill C-16, the Standing Senate Committee on National Finance received testimony from 11 departments and organizations, as well as the Parliamentary Budget Officer and the minister responsible for the Treasury Board.
I’m going to go through some of the departments. I know Senator Gagné mentioned some of them, but I wanted to mention a couple just to highlight a few issues that are important to me and that I hope would be important to the committee.
Infrastructure Canada is requesting $7 billion compared to $4.5 billion requested last year. That is a significant increase of $2.5 billion, or 56%. The $2.5 billion increase is primarily attributed to an increase in grants and contributions for public infrastructure and communities investment oversight and delivery.
I’m going to mention a few dollar amounts because the dollar amounts that we see in the Main Estimates in the budget are so big that I think we have become desensitized to their size.
There is $51 million in grant funding being requested for the Green and Inclusive Buildings program. There is $40 million in grant funding being requested for a number of programs, including the Natural Infrastructure Fund, Canada’s Homelessness Strategy and the Smart Cities Challenge.
In addition, $2.5 billion is being requested for the Investing in Canada Infrastructure Program. I want to give a few comments on that particular program. The Investing in Canada Plan spans 21 federal organizations that include 13 federal departments, 2 Crown corporations and 6 regional development agencies. It’s a very significant plan.
Infrastructure Canada is the lead department for the Investing in Canada Plan and is responsible for meeting reporting requirements and overseeing the plan’s implementation. It also houses the Investing in Canada Plan Secretariat, which is the central point for coordination of the plan. It has a big role to play.
Also being requested is $1.5 billion in the New Building Canada Fund and $468 million for the Public Transit Infrastructure Fund.
Given the significant spending and investments in infrastructure, there have been a number of studies undertaken in recent years. In 2017, the Standing Senate Committee on National Finance release two reports on the government’s multi-billion infrastructure funding program. At that time, the government had planned to spend $186 billion on infrastructure over a 12-year period from 2016 to 2028. That’s $186 billion.
The Finance Committee in its study identified significant problems in obtaining data on projects as well as results data on the infrastructure projects and programs. Last year, the Auditor General of Canada undertook an audit of the Investing in Canada Infrastructure Program, which was in response to a motion passed by the other place asking the Auditor General to audit the Investing in Canada Plan. They had very significant concerns about that infrastructure plan.
She concluded, among other things, that Infrastructure Canada, as the lead department, was unable to provide meaningful public reporting on the plan’s overall progress toward its expected results.
I must say that we did a lot of work on Infrastructure Canada and the Investing in Canada Infrastructure Program. One of the things we noted was that the department has a big map on its website. You could click on certain areas, find out what projects were under way and identify exactly what was going on. But when you clicked on the icons, what you got was incomplete and dated information going back to maybe 2018 or 2017. I don’t know why the map is even on the website.
When we received the Main Estimates, I was surprised by the increase in the funding request given that the department had received a very critical report from the Auditor General and has met only 16 of its 51 performance indicators. Both the Privy Council Office and Treasury Board of Canada Secretariat provide guidance and support regarding programs that cross several organizations. This would be one such program. I had expected that the significant increase in funding would be subject to improvements in program reporting and performance results by the department.
The next department I wanted to provide a comment on is Employment and Social Development Canada. They are requesting $11 billion in the Main Estimates this year compared to $4 billion requested last year. Senator Gagné also mentioned this because included in this $11 billion is $5 billion being requested for the new child care strategy. As of March, all 13 of the Canada-wide early learning and child care agreements have been negotiated and signed with the provinces and territories. As Senator Gagné said, they have included some objectives for the program, including a 50% reduction in fees, on average, to families by the end of 2022, a $10-a-day average fee by 2025-26 for all regulated child care spaces in Canada, the creation of about 250,000 new child care spaces by 2025-26 and the creation of between 52,000 and 62,000 new early childhood educator positions.
But most of the objectives are linked with the year 2025-26. Honourable senators may recall that I asked the minister responsible for the national child care program how many of those spaces and positions would be created each fiscal year to 2025-26. After all, the new spaces and positions will not suddenly be created at the end of 2025-26, but rather throughout the five years to 2025-26. While the minister indicated that this information is included in each jurisdiction’s agreement, the information is actually not provided.
Given the estimated cost of that program over the five-year period, which is $27 billion, the government should disclose — and we should be told — how many spaces and positions should be created each year so that progress can be monitored annually and compared to the number of spaces and positions actually created. In addition, the departmental plan does not provide any targets for the creation of new child care spaces or child care positions. The Parliamentary Budget Officer also released a report on the daycare program and has indicated that he will be releasing additional reports in the future.
The Department of the Environment is requesting $1.9 billion in this year’s Main Estimates, compared to $1.7 billion last year. They have allocated that $1.9 billion into five lines of business. Three of these indicate some increase, while one, conserving nature, is requesting a significant increase of $283 million, going from $325 million last year to $609 million this year. Grants and contributions also show a significant increase from $623 million last year to $770 million this year. Within the grants is the establishment of Canada’s international climate finance program, which is requesting $10 million in grants funding and $16 million in contributions. This is part of a $5.3-billion program announced in June of last year to help developing countries transition to low-carbon, sustainable development.
The department has indicated in its departmental plan for this year that it will continue to collaborate with its partners to establish proper governance. It’s not established yet, they’re working on it. But it was also confirmed by officials from Global Affairs Canada, who indicated that performance indicators will be developed separately for this $5.3-billion program.
The problem is that the department’s results report for 2020-21 indicated that it has only met 8 of its 56 performance targets. Of the 86 organizations reporting on their performance targets, the Department of the Environment was one of the organizations with the lowest numbers of performance targets being achieved. The department needs to review its departmental plan, establish realistic performance targets and achieve results that would instill confidence that the money it is spending is actually achieving meaningful results.
The last department I wanted to mention is the Department of Veterans Affairs because they’re requesting $5.4 billion in the Main Estimates, compared to $6.2 billion requested last year. Last month, the Auditor General released a report on the processing of disability benefits for veterans. Delays in the processing of disability benefits have been a long-standing problem that is yet to be resolved in the department. The report indicated that as of March 31, 2021, over 43,000 disability benefit applications were awaiting a decision, including first applications, reassessments and departmental reviews. While the department’s service standard is to process 80% of their cases within 16 weeks, veterans applying for disability benefits for the first time waited a median of 39 weeks for a decision. RCMP veterans had to wait even longer for benefit decisions for first applications, which was 51 weeks.
Last month, the Minister of Veterans Affairs provided an update indicating that as of April 29 of this year, there were 11,000 applications of the 30,000 waiting to be processed that exceeded the 16-week processing standard, which was an improvement on the 23,000 from two years ago. This was consistent with information provided to our committee by officials. Department officials told the committee that their objective is to further reduce the backlog next year. So while there has been some improvement in processing times, the current statistics indicate that one in every three of the applications in the queue still exceed the department’s service standard. Given the resources available to the government and provided to government departments, I fail to understand why veterans are still waiting so long to have their applications processed.
Honourable senators, before I conclude, I just want to go back and mention a couple of areas where, if the government could improve those areas, it would greatly assist parliamentarians and others in their review of the Main Estimates. If we could have a budget and a Main Estimates that includes all the budget initiatives, we wouldn’t have to be going back and forth between all the supplementary estimates, trying to track and see if those specific budget initiatives have been implemented. If we could get the departmental plans at the same time we get the Main Estimates, if we could get the public accounts by September 30, that would be great. And if we could get the departmental results reports to be published at the same time as the public accounts, that would be a big step forward.
This concludes my comments on Bill C-24 and the Main Estimates for 2022-23. I will wrap up by extending my appreciation to all of my committee colleagues for their enthusiasm and excellent questions in committee. I would also thank our chair, Senator Mockler, our committee clerk, our analysts and all of the staff who make our meetings productive. Thank you very much.