Statement made on 17 June 2009 by Senator Joseph Day
Hon. Joseph A. Day:
Honourable senators, this report was filed yesterday in the chamber. The Journals of the Senate found on honourable senator's desks when they arrived this afternoon has the report at page 1091. I will outline some of the highlights of the report if you wish to follow along.
Honourable senators will know that this report is based on the study done on Supplementary Estimates (A) referred to the Standing Senate Committee on National Finance two weeks ago. We have had an opportunity to meet with representatives of the Treasury Board Secretariat and others. I will outline some of the work that we did and some of the highlights of the report, which I think will be of interest to senators.
Honourable senators will know that supplementary estimates follow the Main Estimates, about which I spoke yesterday. We review Main Estimates for the year in March and consider interim supply on those Main Estimates followed by the main supply. I expect the main supply bill to arrive in this chamber at the beginning of next week. My latest information is that the other place will be dealing with two supply bills on Friday evening. One is based on Main Estimates and the other is based on Supplementary Estimates (A). Unless we are sitting late Friday evening, we will receive them Monday when the Senate sits.
Honourable senators, these reports constitute a pre-study of those supply bills. When the supply bills arrive, it is not necessary for this chamber to refer them to the committee for study because we have already studied them. I spoke yesterday to the report on main supply. I am now asking honourable senators to consider the report of the Finance Committee with respect to Supplementary Estimates (A).
Supplementary Estimates (A) typically would come in the fall in other years because we would not have had enough time to develop from Main Estimates the government's requirements to operate government until well into the fiscal year. Therefore, it has generally not been necessary to have a Supplementary Estimates (A) as soon as we have received this one. We typically would have two or sometimes three supplementary estimates.
However, we have an extraordinary economic situation and the budget was earlier this year than it had been in previous years. I indicated to honourable senators yesterday that in order to get projects into Main Estimates, a deputy minister has to be talking to Treasury Board in October of the previous year. Obviously, none of the initiatives in the January budget are in the Main Estimates. Many of them are here, while other initiatives were in Bill C-10.
There are two ways the government gets authority to proceed with its proposed initiatives. First, is in the budget through budget implementation bills. We probably will have two of those bills and we have dealt with one. Second, is through Main Estimates and supplementary estimates. We have been told there will be Supplementary Estimates (B) and Supplementary Estimates (C) as well.
I submit to honourable senators that it is particularly important for transparency and oversight with all of the extraordinary spending taking place. We are in areas that we have not been before. We are moving ahead and trying to move ahead very quickly.
That is why the government has agreed to quarterly reports. We have learned today that the government has agreed to come forward with a special report in September. It will provide more detail than the report that came out last week in terms of what money has been delivered to projects referred to in various initiatives of the January budget and what is actually happening in various provinces and communities. We are told that report will be forthcoming in September.
Honourable senators, we have worked very hard as a committee. The deputy chair and I want to commend committee members. We are very appreciative of all members attending each of our meetings and helping with this important work. Senator Gerstein as deputy chair, will probably speak on this particular report either when the supply bill comes or otherwise. He and I have been talking about the importance of relaying these highlights to honourable senators.
I also want to thank our clerk, Adam Thompson and the two researchers from the Library of Parliament, Jean-François Nadeau and Guy Beaumier for the hard work they do. Both researchers are very skilled with respect to supply cycle issues and general government financing. They have worked significant overtime to help our committee get these reports to you in a timely fashion to ensure we will be ready when the supply bills arrive. This happens on a regular basis. Printing and translation also are put in "overspeed" mode just before the end of each quarter of the supply cycle. We see it in March, June and December.
It is very important that we show our appreciation to those who make all of this possible for us. Otherwise, honourable senators, if we are not receiving these supply bills until the beginning of next week, we could be here for half of the summer dealing with this if we did not have that support and cooperation. We very much appreciate it.
Honourable senators, let me tell you briefly some of the points in this report. The report is basically what we learned from our study of the supplementary estimates.
Voted appropriations are typically in this range of $5 billion made up of budgetary and non-budgetary appropriations. Non-budgetary are expenditures that the government intents or hopes to get back such as student loans, buying mortgages, et cetera. Statutory appropriations — those in other statutes we have passed — are $1.5 billion. Honourable senators, here is the big number, $52.2 billion in non-budgetary statutory appropriations.
It is important for you to keep these figures in mind. We are in an entirely new area trying to deal with this economic downturn. In one breath we have to commend various government departments and agencies for their initiatives. However, in the second breath, we have to be watching this very carefully to ensure that errors and unintended consequences do not occur.
I talked yesterday about $235 billion being the total budget for the year. With this addition, we are up to $242 billion, another $6 billion of voted appropriations, both budgetary and non-budgetary. We anticipate, honourable senators, that there will be further expenditures. There will be two more supplementary estimates and there will be another budget implementation so there will be other items.
One way that we keep an eye on expenditures from the committee point of view is to review, for example, the government's plan for stimulus. We want to know what has been spent, what has been authorized and where we are with respect to the $22.7-billion fiscal stimulus.
Brian Pagan, from the Treasury Board Secretariat, has been good in providing us with that information. Once we pass the Supplementary Estimates (A), the supply bill that goes with that, $20.6 billion of the $22.7 billion will have been authorized. That does not mean it is out there, but it has been authorized by Parliament and it is up to government and the government departments to distribute the money into the economy. That leaves $2.1 billion. We anticipate we will authorize another $2 billion, in either a budget implementation bill or in another Supplementary Estimates (B) or Supplementary Estimates (C), for example.
Honourable senators, some of the major items and major initiatives may be of interest to you. They were of interest to our members on the committee. With respect to the Afghanistan mission, my recollection is we had approved approximately $400 million or $500 million. In these Supplementary Estimates (A), the Department of National Defence is asking for another $822 million.
We asked why the supplementary estimate request was in excess of the Main Estimates request and we had discussion on that point. The reason related to timing and approvals, et cetera. Through that discussion, we learned that their overall annual estimate — for DND alone — for expenditure for the fiscal year that started in April is $1.5 billion in total for this fiscal year. They have now received $800 million plus $500 million, and they will ask for more as they develop their programs in that regard.
They have also asked for major capital equipment of $141 million and $140 million to acquire medium-sized military trucks to transport troops and supplies. There are significant expenditures there.
With respect to statutory budgetary spending, spending that has been approved otherwise but we are told about it, $2 billion in infrastructure was budgeted.
One area that is important to be aware of comes under fiscal equalization. Senators will recall we were not able to study that area under our study of Bill C-10 because we did not have time. I spoke about that yesterday. The government told us last year that they had solved the equalization problem forever. Then it was changed this year.
As a result of the change in fiscal equalization, $1.9 billion less will go from the federal government to the provinces. The provinces planned that money — $1.9 billion — into their budgets based on the arrangement made last year. We will probably hear from the provinces on that item as we move forward.
Another area where there was a decrease in the estimate was the revised forecast by the Department of Finance of public debt charges due to significant downward revision in the forecasted interest rates, and also a lower expectation for inflation; a combined $2.4 billion because our debt servicing is less due to the low interest rate.
Honourable senators, the interest rate will not stay down and neither will inflation. We are increasing the debt. I made this point yesterday. We will not have this kind of saving. We will not see that in the future. This amount was $2.4 billion below estimate.
Statutory non-budgetary spending is the point I talked about earlier. Statutory means it is in another statute — we have already approved it previously — and there are a lot of those major items in Bill C-10. This one, for $52 billion, goes to Canada Mortgage and Housing Corporation.
The Hon. the Speaker: I regret to inform honourable senators that the honourable senator's time has expired.
Hon. Gerald J. Comeau (Deputy Leader of the Government):: Five minutes.
Senator Day: I am almost finished. Thank you, honourable senators.
Canada Mortgage and Housing Corporation has an amount of $52.3 billion. That is part of a $125-billion program by Canada Mortgage and Housing Corporation to buy insured loans in the marketplace to try and increase liquidity. They are in the process of buying these mortgage loans or groups. The way they buy those loans is that a bank will issue a number mortgages and loans, then will put them all together and try to sell them to various people for investment purposes. CMHC is buying $125 billion worth of those syndicated loans. This statutory approval so far is for $52 billion. They have already had $75 billion in that regard previously.
Treasury Board vote 35 is another area we can watch. Treasury Board vote 35 is the $3 billion we approved in late March to allow Treasury Board to start money flowing. That money is approved only until the end of June and then it is over. We have asked for an accounting on a regular basis. To the end of May, $1.9 billion of that $3 billion has been sent out by Treasury Board. We receive a listing of that money. Honourable senators have already approved the $3 billion, but we are given an indication of where the money has gone in the supplementary estimates.
Honourable senators, vote 35 will end at the end of June. If it is not all spent, then it stops. The government will not have that money to pass out later on. The money goes back into the Consolidated Revenue Fund. We are keeping an eye on that item. The end of June is coming up and we anticipate that significant money will not have been disbursed at that time. If other funds are needed for programs that did receive funds they had hoped for from the $3 billion, that money will have to come out of either the next supplementary estimate or the next budget implementation bill in the fall.
Honourable senators, that is a brief outline of what is in this report. To remind you again, when honourable senators receive the supply bill they will be asked to vote for $5.25 billion on this particular one. Keep in mind, honourable senators, that there is another $52.6 billion in already approved money reported in there as well.
Please click here to read the full exchange of this debate