Statement made on 16 June 2009 by Senator Joseph Day
Hon. Joseph A. Day:
Honourable senators, as Senator Baker has briefly spoken on a previous matter, I will take his cue and provide a little background to this report.
Honourable senators will know that we treat supply bills in a manner different than the normal type of bills that come through from the House of Commons. In fact, we are studying, and we have been studying, the Main Estimates, and we continue throughout the year to follow the mandate given to us in studying the Main Estimates.
The first report that our Standing Senate Committee on National Finance gave, an interim report on the Main Estimates, was with respect to interim supply in late March for the period from April 1 to June 30. Honourable senators will recall that supply was larger than normal to provide the government with the money to organize the stimulus package and deal with the economic downturn. Interim supply was approximately $27 billion.
This report that we are giving will be the pre-study for the supply bill when it arrives. It is for the balance of the funds outlined in Main Estimates, the government's expenditure plan for fiscal year 2009-10.
Honourable senators will know that the government expense plan appears in these Main Estimates as Part I. In Part II, the entire Main Estimates are itemized by agency and department. The schedules appear in Part II attached to the supply bill when it comes. It is our responsibility to ensure that the schedule attached is the same as that we pre-studied. If it is, and we can assure honourable senators of that, we can move quickly in dealing with the supply bills because the items have been studied extensively.
Honourable senators should be aware of other parts of Main Estimates. Part III is a report of the plans and priorities of each department. Part III is available for honourable senators to review and to understand what the department hopes to achieve over the next year. It is a valuable document. A year and a half later, the departmental performance report is produced. It is the department's analysis of how well it met its plans and priorities over the previous fiscal year.
Another bit of general background to keep in mind is that there are statutory items in the Main Estimates and in the government's plan. For statutory items, we have given government the authorization to spend on those statutes in previous bills that were passed. We will not vote on those statutory items when the supply bill comes. We will vote only for the voted appropriations in these supply bills. The other items are there for information.
We have $235 billion in this particular Main Estimates for this fiscal year. Main Estimates for 2009-10 are $14.7 billion greater than Main Estimates for the previous fiscal year. The increase is 6.2 per cent over the previous year. Main Estimates are divided into two aspects. The voted appropriations are $86 billion. Honourable senators have already voted for $27 billion, leaving a balance of approximately $58 billion. We will authorize the government to spend $58 billion when we vote on that supply bill for main supply for the rest of this fiscal year. In addition, honourable senators, $150 billion in expenditures are statutory authorities and they are for information purposes only.
Not all of Budget 2009 items are accounted for in these Main Estimates. However, all the items announced in earlier budgets or fiscal updates are included. We were advised by one of our witnesses who works for the Department of National Defence, in preparing their estimates and their need — each department goes through this process — that to be in the Main Estimates, it is necessary to submit their request to Treasury Board in October of the year previous to have it approved.
In other words, all departments needed to submit their information by October 1, 2008. Then in January, along came the budget. It changed a lot of things. The Main Estimates that we saw in March did not reflect much of what was in the budget. This year was a particularly significant year. Those items are picked up in supplementary estimates. Last year, and again this year, we have been advised there will be three supplementary estimates — Supplementary Estimates (A), Supplementary Estimates (B), and Supplementary Estimates (C).
We have already received Supplementary Estimates (A). I will be speaking on that item tomorrow. Supplementary Estimates (A) starts to reflect some of the budget items. The Standing Senate Committee on National Finance is trying to follow the stimulus package and the $3 billion that Treasury Board was given to use in the first three months of the year to start matters moving. We also try to follow the $22 billion that the government announced in the budget. Against that task, we also try to find where the deficit is coming from.
Honourable senators will recall that in October of last year, it was announced that there will be no deficit. In the January budget, it was announced that there would be a $33.7 billion deficit. In the second economic update released late last week, the deficit is $50.2 billion.
An Hon. Senator: And we ain't seen nothing yet.
Senator Day: Some of the predicted deficit comes from increased expenditure, and some of it comes from a significant reduction in revenue that the government predicted from reduced corporate taxes and income taxes.
The committee is trying to follow all these numbers on behalf of honourable senators. Throughout the year, we will follow government expenditures to try to determine where the various figures come in and where authorization has been given. Authorization is the most important area, honourable senators. We are asked to authorize expenditures.
For example, we want to ensure that programs advertised for housing have been authorized, and that there is money to cover them. We have been told that some programs relate to income tax from this fiscal year. Income tax is paid only when we file our income tax in April of next year for 2009. Therefore, government is not in a hurry to obtain that authorization. It will come in one of Supplementary Estimates (B) or Supplementary Estimates (C). There has been extensive advertising of the program already. Honourable senators can decide for themselves whether they believe that to be the way we want to go, but that is the way matters are progressing at this time.
I want to bring a couple of other items to honourable senators' attention with respect to expenditures and payment type. Of the full amount of $236 billion that I mentioned earlier, $50 billion of that is transfers to provincial governments for equalization and other programs. That money is gone with virtually no control by the federal government other than the contracts and the memoranda of understanding in place. Fifty billion dollars is transferred to other levels of government.
An additional $54 billion is transferred to people through Employment Insurance, Canada Pension Plan and supplementary pensions. Total transfers are $139 billion out of a total budget of $235 billion.
The public debt charge is another extremely important item for us to follow. We are increasing our public debt this year by $50 billion, at least. We had paid it down to approximately $430 billion. Over the next two to four years, it will go up by $100 billion or $200 billion. Interest rates are low at this time, and the public debt charge is $32 billion. When we double that and interest rates begin to rise, the accumulated annual deficit will be such that you can imagine how much discretionary expenditure will be lost by the government. It is extremely important that we watch expenditures and ensure that deficits do not become institutionalized and repeated year after year, as has happened in the past.
Honourable senators, in the eighth report, your committee has pointed out a number of areas for your consideration. I will not review each of them but I want honourable senators to be aware that for each quarter and each year, we invited officials of certain departments or agencies to appear before the committee to talk about their expenditures. We wanted to know about the Canada Food Inspection Agency and their budget of $503 million per year. Where did that go? What did it entail? That information is outlined in our report. We wanted to know about the listeria outbreak and the role of the Canadian Food Inspection Agency. We had heard stories and read newspaper articles that the changing role of the Canadian Food Inspection Agency resulted in fewer inspectors on the ground. We were assured that was not the case and that the first line of defence is the manufacturer, which makes sense because manufacturers must have safety inspection within the manufacturing unit. The CFIA inspector ensures that the rules are being followed and that they have a good safety inspection system in place. If they learn something in one place, they pass it to all of the manufacturers in that industry.
Another group that we brought before the committee spoke about expenditure restraint. We did not bring in the major public service unions because there is pending litigation with respect to the reduction in annual salary increase to 1.5 per cent, which is contrary to collective agreements that they had entered into. We spoke to groups that were not involved in litigation. Concern about a growing gap between certain areas of the public service and the private sector was brought to the attention of the committee. It was suggested that the gap be corrected as soon as possible.
Representatives of Canada Mortgage and Housing Corporation appeared before the committee. We were interested in knowing what activities they were involved in. When we heard from them on the Main Estimates, we learned about their program of buying mortgages, which we thought we had better discuss. We heard from them on the Supplementary Estimates (A) as well, and there will be more outlined in that regard.
Honourable senators, we heard from officials from Atomic Energy of Canada and Public Sector Integrity Canada, on which there is some very good information in our report. Honourable senators will see that AECL's budget went down by one third and that the two MAPLE reactors intended to produce 50 per cent of the world's isotopes were cancelled for two reasons: technical challenges and finances.
Honourable senators might wonder if there had not been such a significant reduction in AECL's budget, would they have cancelled those MAPLE reactors and would we be without isotopes at this time. Honourable senators, consider the millions that were spent on those reactors. That subject deserves further investigation.
Honourable senators, I see that my time has expired so I urge quick passage of this report.
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