EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 5, 1996

.0911

[English]

The Chairman: Welcome, everyone here today.

The eight report of the subcommittee or steering committee is before the committee members. We don't have sufficient quorum to adopt that this morning. However, it's before you for your information.

At the conclusion of Tuesday's meeting we outlined the agenda for committee meetings for the rest of this period between now and Christmas. Tuesday the meeting is from 8 a.m. until 11 a.m., and it's on cost recovery. The list of those who have been invited is before you today. A letter is going out to each of those, copied to yourself, telling them briefly the purpose of the meeting and requesting that their presentation be five minutes long.

In Wednesday's meeting a number of witnesses are coming before us, as we've been talking about over the fall, on rural renewal. Thursday afternoon Minister Goodale will be before the committee on the grain marketing issue in western Canada. After that, may you have a merry Christmas.

We will start today's meeting. With us this morning are Dennis Kam, Steven Silcox, and Dick Robinson. As we know, members, the method of doing the bookkeeping and reporting the activities of Agriculture Canada - it's one of the departments that have been under review over a period of time. Two or three weeks ago we passed the supplementary estimates in the House. We've had some other reporting documents sent to us since that time. We felt it would be worth while if we had Dennis come back to the committee. He walked us through the main estimates last spring. We are having him come back to the committee to go through the changes and updating on the method of reporting and also to give us an opportunity to have a better understanding on the numbers.

It was stressed to me when the supplementary estimates came out, and there were some reports in the press, that an additional $600 million-plus was going to be spent in agriculture. The impression one article left with me was that the money was not anticipated or in the main estimates. When I talked to Dennis about that, he said that was not the case. Some of those dollars were already in the main estimates. I know it took some explaining on Dennis's part to get that through my thick head. I just thought if we could all get a little better an understanding it would be worth while.

Mr. Landry, you had a comment?

[Translation]

Mr. Landry (Lotbinière): Mr. Chairman, my question may be out of order, but I would like to make sure that I understood correctly. Did you say that the eighth report of the subcommittee would be adopted next week only?

.0915

[English]

The Chairman: We can't adopt it today because we do not have a quorum. There's not sufficient quorum today, so we'll have to wait until there's a quorum. It's before you today only as information.

[Translation]

Mr. Landry: Mr. Chairman, as you know, we must be granted a 180-minute discussion before closing the debate and putting the motion to a vote. Did you take that into account in your plan for next week?

[English]

The Chairman: A 180-minute discussion on what?

[Translation]

Mr. Landry: Mr. Chairman, I was asking you whether the eighth report of the subcommittee would be adopted next week. My other intervention was to confirm that the report must be discussed during 180 minutes before being put to a vote.

[English]

The Chairman: I don't follow you, Mr. Landry. We don't have to have a 180-minute debate on the subcommittee report. Is that what you're referring to? That's just the agenda of the committee.

[Translation]

Mr. Landry: I'm talking about bill C-72. We intend to propose an amendment to that bill.

[English]

The Chairman: You're making a specific reference to item 4, which is the appearance of the minister before the committee. We discussed that very clearly in this committee two meetings ago. We understand we cannot discuss the bill itself technically at committee until it has had the 180-minute debate in the House, but we said we wanted to have the minister before the committee to talk about grain marketing issues in western Canada before the House adjourns for Christmas. Technically we won't be discussing the bill per se but we will be discussing the subject matter addressed in the bill, which has been referred to the committee but which cannot come here until after 180 minutes of debate. But the issue we will discuss.

Sorry, Dennis. Please now introduce your colleagues and proceed.

[Translation]

Mr. Landry: That's fine, Mr. Chairman. Thank you.

[English]

Mr. Dennis Kam (Acting Assistant Deputy Minister, Corporate Services Branch, Department of Agriculture and Agri-Food): Thank you, Mr. Chairman.

My colleagues are Steve Silcox, Bob Caron, and Dick Robinson. This team has worked at putting together all the documents that have been tabled in Parliament on behalf of Agriculture over the last several years, in fact, but also the most recent documents. I thought we could all be here to have an opportunity to hear your comments on their work.

As the chairman said, in the last several weeks several documents have been tabled in the House by the President of the Treasury Board. Two of those documents are brand-new documents, ones you are seeing for the first time. I hope you have found them somewhere in your mail. A green document tabled on October 31 is called the performance report. It's a brand-new document. Another document was tabled in the third week in November, and it is called the in-year update. It's a yellow document. These are both brand-new documents.

I think we've passed around our presentation and I'll take you through that. The intent, first of all, is to give you a context for these documents, to explain how they fit into the government's expenditure planning cycle and documentation that is made available publicly and to Parliament to explain the government's expenditure plans and outcomes from using those expenditures, and also to situate the supplementary estimates and public accounts in this context.

In the handout, from the table of contents, you'll see we talk about the general context of reporting to Parliament - the next steps, as the system matures, in the process of improved reporting to Parliament, the supplementary estimates. The reconciliation of the supplementary estimates with the main estimates is an issue the chairman raised. Finally, we'll talk about this green document, the performance report, and explain the format and structure of it and how it fits.

.0920

The first page of the handout is a schematic illustration of the old system and the new system for reporting to Parliament. As you'll note on the top panel, with the old system we have the traditional documents - the main estimates, the supplementary estimates, and the public accounts - the main expenditure documents that are tabled by the government by the President of the Treasury Board. There are the main estimates in February, the supplementary estimates in December and March, and public accounts as early as August but as late as October or November, depending on how quickly the accounts are put together for the year end.

The main estimates, which are usually tabled a few days after the budget, have traditionally had three parts. Part I is a summary overview of all the main estimates. Part II is the traditional 300-page to 400-page blue book. In part III, there's an individual volume for each department and agency, explaining in much more detail the expenditure plan of that department or agency.

That was the traditional model. It hit you with a lot of information in the spring at the same time as the budget. Then the supplementary estimates were tabled subsequently in November or December and in March, without any context for them.

The new system attempts to space the documents more evenly over the year and give them a better context so there's a more general understanding of how these documents fit together. It provides an effort to have more timely information available to parliamentarians when issues are at hand.

The new process, which has just started this past year, has the main estimates tabled in February shortly after the budget with the traditional parts I and II, but the intent is to delay tabling part III and table it in two pieces, with a report on plans and priorities in March, generally about four weeks after the budget and main estimates are tabled, and a performance report in October. In addition, there's an in-year report that will be tabled in November to complement and support the supplementary estimates that will be tabled in November.

This process is just beginning to unwind. As I've said, the green document, the performance report, was tabled this fall. I'll refer back to our part III that was tabled last February, as the very first step in this process. You'll note, if you have your part IIIs with you, there were two distinct sections of the part III document last spring. We had a planning chapter and a performance chapter. The next step is to separate those two chapters into two documents, with a planning document in the spring and a performance document in the fall.

The performance document will give you information about four or five months earlier, after the close of the fiscal year, than was the case in the past. The planning document, as I say, will provide a little more time for departments to finalize their plans after seeing what's in the budget, since it is recognized that occasionally departments don't have full insight into what is contained in the budget on the dates tabled. We often tabled documents shortly after the budget without fully reflecting all of the implications of the budget.

The next page gives just a little more explanation, contrasting the old system we're transiting away from and the new system and the advantages, as seen by the government and I believe by Parliament, in moving to this new reporting format.

Each step along the way, as these new documents have been introduced, there have been resolutions in the House, where the government sought concurrence with these adjustments. I believe there'll be another resolution put forward this week to add another dimension of this to the tabling of the planning document about four weeks after the tabling of estimates.

.0925

In the yellow book in your report, you'll notice that 16 departments are covered in this document. About six or seven of those departments did not table supplementary estimates and therefore filed a nil report.

The other departments are all treated separately by chapter in about three or four pages. Agriculture is the first chapter in this document. We've reproduced that chapter in this handout in case you don't have it. You'll notice it's about three or four pages. The intent of that document is to provide a context for the supplementary estimates to explain major changes to the expenditure plan as set out in the spring in our planning document.

This year, the supplementary estimates were tabled in early November. The in-year update was tabled the third week in November. I think the intent, over time, is to table those roughly at the same time so they can be addressed at the same time.

I won't go through that in your report. It's there for your information. We'll talk about the general context later.

The page entitled ``Next Steps'' generally describes a procedure that all departments are following, not only Agriculture. It puts in place, within the context of a new planning document, a new planning, reporting and accountability structure based on business lines and focused on results.

The government has decided, in the context of this improved reporting to Parliament, to strongly encourage departments to move to a results-based management approach whereby the planning documents will set out performance targets by business line. The performance reporting documents tabled in the fall about 16 months later would report on how the departments had done vis-à-vis those performance targets set out in the planning documents. It's a copy and a planning cycle that will focus on what sorts of outcomes and results are achieved with the resources allocated by Parliament to departments.

The Department of Agriculture is planning to set out in its next planning document, to be tabled in February, a proposed business line structure for the department. Now, as you'll note, we have a program activity structure. We organize our estimates, as we have one Agriculture and Agri-Food program and several activities.

We'll be converting to a business line structure, which will be an attempt to explain more explicitly what the resources allocated to us are used for, why we're delivering programs and what we hope to achieve with those programs. We'll be putting out a proposed business line structure in our planning document this coming spring and seeking your reaction and the reaction of parliamentarians and the public to that structure.

We will also, of course, produce another performance report in October 1997, which will also seek, as a first stage, to report on the targeted results set out in our planning document in the spring. Then there will be another one in your report.

We hope to table our planning document based on the new business line structure in February 1998, after we've been able to take account of the consultation process and the reaction from parliamentarians to our proposed business line structure.

On the next page is a pie chart that shows the distribution of 1996-97 supplementary estimates (A). You'll notice we've identified the division into the major categories of spending - grants and contributions of $117.7 million; a small amount of capital, $3.3 million; $58.8 million of operating funds; and $467 million resulting from updated forecasts of statutory expenditures.

I don't think the government's press release announcing subsidies of $117.7 million number explained clearly that those grants and contributions were voted grants and contributions as well.

.0930

The next page is an extract from those supplementary extracts as tabled in the House. The following two pages give a more detailed explanation of the items in supplementary estimates, and the subtotal by vote - the operating vote, the capital vote, and the grant and contribution vote.

On the next page, the reconciliation of the main estimates to in-year update will address the question that the chairman raised at the outset in his comments, as to whether the funds identified in the supplementary estimates were incremental or new funding requirements or simply part of the government's expenditure plan.

The attachment to this page is an extract from the part IIIs of the estimates that were tabled last February, and there is a key number on that page, which I'll refer to.

The estimates that were tabled in March 1996 set out our reference levels, planned new initiatives and total expected estimates to be laid before the House during 1996-97 at $2,345.4 million.

The planned initiatives of $356.2 million indicated that the government expected, over the course of the year following the tabling of main estimates, to come forward with supplementary estimates of up to $356 million in new spending authorities. So in concert with the normal process that the government follows, the main estimates, in a sense, are the first instalment on the government's expenditure plan, the first and by far the major step, whereby the government seeks authority from Parliament to spend public moneys.

The supplementary estimates are normally a way for the government to seek additional instalments within their overall expenditure plan to cover items that were unanticipated at the time of the main estimates, items for which the detail wasn't fully worked out for programs and could not be announced in the main estimates.

So in this case, we had indicated in March 1996 that we anticipated coming forward with supplementary estimates and seeking supplementary authority to spend up to $356 million. You will note that supplementary estimates (A) in fact indicated spending authority of $646.8 million, and $309 million of that related to an updated statutory forecast under the western grains transition payments program.

Originally, and in the government's expenditure plan, it was anticipated that $1.2 billion would be spent under that program in 1995-96. In fact, only about $990 million was spent because of some delays in making payments and some delays in processing applications and, indeed, in receiving applications from the eligible recipients. So $390 million was moved forward from 1995-96 and 1996-97 that originally was in the government's expenditure plan for 1995-96 and had actually been charged to the deficit in 1994-95.

So with respect to the question about how the cash went out, the government actually recognized the charge for the western grain transition payments program in 1994-95 in its deficit calculations, recognizing that the $1.6 billion would flow out over the next one or two or three years. Making that adjustment, as we've done in your update, indicates that our new initiatives are slightly over $300 million and our current table estimates are $2,327 million, which is within the limits set out in the main estimates in March 1996.

That indicates we would still likely come forward in final supplementary estimates with the possibility of seeking some spending authority for some small additional funding in the next supplementary estimates to be tabled in March.

Mr. Chairman, maybe I can stop at that point before I move on to the full performance report, in case there are any questions at this point.

The Chairman: When you say ``performance report'', you're referring to the green book.

Yes, I think we maybe should stop, Dennis. I'm speaking on behalf of myself here, but over the years that I've been here I've found this process confusing and difficult to understand, and I can tell you it puts an individual in a position of feeling somewhat embarrassed to ask a question on it because we assume we're suppose to understand it. I've had the opportunity to ask those questions privately to Dennis as we went over this presentation beforehand, but I do want to make sure that as members, at least for today, we understand these as clearly as we possibly can. I think it's worth while taking some time to do so.

.0935

One of the things I didn't understand until it was explained, and Dennis has just done it here now, was the $309 million that's in brackets on that reconciliation page. It's money that was anticipated to be paid out last year but will be paid out this year.

So based on that, then, Dennis, if I could ask you a question, back after budget time and in main estimates it was estimated that the cost of running the department for this year would be $2.345 billion. To date there has been $2.327 billion requested. So when you say there is the possibility of further supplementary estimates or requests - if I could put it that way - coming forward, it would be the difference between the $2.327 billion and the $2.345 billion in order to stay within the main estimates at the beginning of the year for the department.

Mr. Kam: That's correct.

The Chairman: Now, it's not impossible for the government to come forward and request more money if it can be justified, naturally.

Mr. Kam: No, that's not impossible. The Minister of Finance, of course -

The Chairman: He would probably have something to say about it.

Mr. Kam: Yes. He would set the overall expenditure plan. He may have some contingencies. As we know, he does have some contingencies set aside in the overall expenditure plan of the government. Those contingencies are primarily related to protecting his deficit forecast and to deal with errors in the overall economic forecast.

There is always scope for reallocation across departments if there is a major priority that the government identifies, so one could see an additional supplementary estimate for a particular department, with all other departments losing some funds if the government chose to make some reallocation.

As the expenditure plan sits for Department of Agriculture, we have been authorized to spend up to $2.345 billion in 1996-97. You're quite correct; if there was a priority that was of sufficient importance that the government chose to reallocate from other departments, then we could exceed that, but it would be effectively through a revision of the Minister of Finance's fiscal plan.

The Chairman: I'm going to ask one other question, Julian, before I come to you.

If I were to go back in the in-year update to the main chart on page 2, the net $646 million minus the $309 million, if I were to add up all of the figures - Let's start at agricultural research and development, where supplementary estimates (A) is $12.3 million; in inspection and regulation, it's $19.7 million; and in policy and farm economic programs, it's $11.7 million. These are under operating. Then under statutory authorities, in policy and farm economic programs there is another $158 million. If I were to add up all of those numbers in all of the shaded areas under supplementary estimates (A), then I would get the $646 million. Okay.

Mr. Kam: Go down the column to total authorities.

The Chairman: Yes, the $309 million is in there.

Mr. Kam: Yes, but the total there for supplementary estimates (A) is $646.8 million.

The Chairman: Yes.

Mr. Kam: So they're the same numbers that were in that reconciliation table.

The Chairman: That's where the $646 million comes, through there.

Mr. Kam: That's correct.

.0940

The Chairman: Okay. And the figures in brackets - my head is awfully thick on this stuff, and I'm sure it's thicker than the heads of the rest of the members - for example, under agricultural research and development, for internal reallocations, $2.2 million, is that reallocation money that came in there or is that money that left the department?

Mr. Kam: That's money that left. It left that activity.

The Chairman: So as an example - and correct me if I'm wrong - the bracketed $2.2 million in operating for agricultural research and development means there's $2.2 million left there. The next column, inspection and regulation, shows an internal reallocation of $2.2 million. That means that more came into the operating activity, but we can see that it left agricultural research and development.

Mr. Kam: That's correct.

The Chairman: Okay.

Mr. Kam: Several times during the course of the year, we in the department will examine where we are with respect to our expenditure plans by activity, and if there are reasons - for example, in certain activities the plans may have not materialized as was anticipated and the funds have become surplus. Those funds are available for reallocation within the department -

The Chairman: Within the department.

Mr. Kam: - to deal with pressures that have also been unanticipated. So a number of times during the year we will be looking at the opportunity to manage the spending pressures we have within our allocated resources by identifying surplus funds and moving them somewhere else in the department. In each case, the branch staff - it was the research branch in this case - would identify to us that they didn't need $2.2 million, so it then becomes available for reallocation to another pressing need in the department.

The Chairman: Okay. Mr. Reed.

Mr. Reed (Halton - Peel): Thank you, Mr. Chairman. I'm going to try this as a fellow thick-headed -

The Chairman: Do you mean I'm not alone?

Some hon. members: No.

The Chairman: I feel better already.

Mr. Reed: You're talking to a guy who can't make out his own income tax form any more.

Some hon. members: Oh, oh!

Mr. Reed: Just to clarify this, as I understand it, your main estimates, then, come in below a target figure.

Mr. Kam: Yes.

Mr. Reed: So there's a gap there you try to stay within and you fill it up with supplementaries as needed. Is that correct?

Mr. Kam: That's right.

Mr. Reed: All right. There must be a rationale for doing it that way rather than going for the target in main estimates.

Mr. Kam: Yes. In his budget, the Minister of Finance effectively makes an allocation to every department for every program of government at a very high level. Those allocations are based on the decisions that have been taken by cabinet and by the government in the previous year, so any policy decisions that have been taken have been costed and have been taken into account when the Minister of Finance is setting his overall spending targets by department.

Indeed, some of those decisions would have been taken in the immediate run-up to the budget. There may have been a new spending program agreed to during the budget planning process, with the funds set aside in the budget, but not with sufficient detail. The department may not have been advised in full detail or the department was simply given marching orders to develop a detailed design for that spending initiative.

At the time of tabling the estimates, the details haven't been worked out. So the government perhaps would announce an initiative to spend in a particular area, but with the details to be worked out. The department will be busy working out those details so as to be in a position to set out all the terms and conditions related to the program and get program approval from Treasury Board. And only after program approval from Treasury Board is obtained can the authority be sought from Parliament to spend the money. Therefore, that's why we have supplementary estimates.

The budget plan of the Minister of Finance sets out the spending targets by department. The main estimates, as I said, is the first instalment and funds for all known programs and costed programs - and typically, that's 95% or 96% of the funds set aside by the Minister of Finance - are set aside. Then during the course of the year, new spending initiatives are worked out in more detail and the additional spending authority is sought from Parliament through supplementary estimates.

The planning process is really a continuing process in the government, and we're taking snapshots at any point in time, so there are always some things in a bit of a state of flux. Only if you had a stable situation with the department having a very stable program with very little policy could they seek their total budget in the main estimates. We do have that, particularly for a number of agencies and departments that are single-purpose. Their whole budget is set out in main estimates and they rarely have supplementary estimates.

.0945

Mr. Reed: Obviously the supplementary exercise you go through allows you some kind of control over the spending. In other words, if you did it all as main estimates and simply allocated that money, some departments would have too much and some would have too little, but at the end of the year if there were a surplus in a department there would be a scramble to spend that money. So the next year's budget would -

Mr. Kam: There are probably two answers to that. All departments have authority to carry forward some of their surplus funds. Particularly with their operating funds, if departments do not spend all their operating funds in one year they can carry forward up to 5% of their operating funds to the following fiscal year.

So indeed as part of our supplementary estimates (A) here we've asked for and obtained the carry-forward of over $30 million in operating funds that were lapsed in 1995-96 and are made available to use again in 1996-97. Of course if we don't spend those we can carry them forward again. We've been doing that consistently over the years.

That's one initiative the government has to encourage departments to be conservative, be prudent in their spending.

Mr. Reed: This is your way of rewarding them, if you like.

Mr. Kam: In effect. We're basically saying don't spend money until you really have to; you can get it back the following year. You don't lose it at the end of a fiscal year, which used to happen until three or four years ago, when this new policy was introduced.

The other factor is that even if the budgets were fully allocated, the Minister of Finance, by setting out his budget plan, in effect authorizes departments to draw down up to that limit. But at any time the government can decide to change the rules, if they wish. That does destabilize planning and things like that, but at any point the Treasury Board and the Minister of Finance could decide the plans are changing and, Department X, you can no longer spend what we said you could spend; we're going to freeze a certain portion of your budget and you will not be able to spend it.

Mr. Reed: Have you ever tried any other ideas for rewarding departments for being frugal?

Mr. Kam: We have carry-forwards on the capital vote and on the operating vote now.

Mr. Reed: You know, every department of every kind of government, whether it's municipal, provincial, or federal, has lived with this trap over years. I can relate anecdotal stories about my niece watching workers throw a tonne and a half of salt into the river where I live. Ask them why they're doing it: ``Well, it's budget year''.

The Chairman: It must have been provincial. That wouldn't be federal.

Mr. Reed: It was municipal.

The answer was, well, it's the end of our budget year; if we don't get rid of the salt we're not going to get an allocation for next year. That's a terrible, glaring, tiny example, but I do believe all departments have faced that in the past.

Mr. Kam: Yes, and that is the rationale for this carry-forward of the operating budget - to discourage that. In fact, it was based on a belief that if departments didn't spend their budgets at year-end they might lose them. That in fact never happened for a department as a whole, in part because the accounts come out so late after the year that the new budget has been set already. It takes a while. You would have to have a pattern of several years of underspending actually to lose your budget.

I think what often did happen was that there would be reallocations within a department. If certain managers were consistently underspending, usually the deputy head would say, we'll reallocate to our pressures. So managers at the more micro level had the incentive to spend.

Now, with the operating budget carry-forward, which is normally delegated down to managers at all levels in a department, they all have the incentive to be prudent, as I said, and to plan for a carry-forward. If something is not required this year because they had a bad construction season, for example, and they couldn't spend all the money on the project, they will have the money available next year to finish that project. It facilitates better planning as well as more prudent spending patterns.

.0950

Mr. Reed: Thank you.

The Chairman: Mr. Collins.

Mr. Collins (Souris - Moose Mountain): Thank you, Mr. Chairman. I like the process. I just wonder how we get more paper. I think we need more paper here.

Some hon. members: Oh, oh!

Mr. Collins: It boggles my mind. I know you've condensed it, but I always like to be able to say, ``And what do I compare those figures to?'' At least I would have some kind of working analysis. If I'm coming down this line and you have this whole series, great, but compared to what? Is it the last six months or the last six weeks? Where is it?

I think the process you have in place is fine, but I want to make sure that we have some goals and objectives at the end of that time so we're not just saying we've got this in, we're going to turn this out and that out, and if we keep shooting enough paperwork these guys will never know what the hell we're up to.

The Chairman: May I interrupt for just a second? Based on Bernie's question, maybe we should go - and it's a very good question, Bernie - to the green book in front of us so that what you're talking about is - when you look at the in-year update, how are we doing compared to last year? Or, for example, how were we doing in the years before? It's in this green book -

Mr. Collins: I know.

The Chairman: - and we're going to go to that.

Mr. Collins: I want to just go back to a couple of examples before he gets to that.

The Chairman: Okay. Then after that I think maybe we will go to that green book so that we can answer some of the questions that might come up from members.

Mr. Collins: I have three examples.

PFRA is a project in Saskatchewan. It's a good project and they spent five years on it. And at the end of that time, the environment department says they can't have it. So now we've spent five years going through a process that makes a hell of a lot of sense, but because somebody sitting over in some other ivory tower says no, now we're stuck with a program that should be going forward and we have some tickety-boo saying no.

I'm trying to say to the guy out in Saskatchewan, what the hell did we do it for, then? We have a bloody octopus here. Everybody's got an arm on it and nobody's got a head screwed on the thing.

That's no comment on you. I'm just saying that overall I see that while we're trying to get into shape with business and say we're working with them, I don't know - I take two steps forward and I waltz three sideways because someone's figured out another little wrinkle that I had better just check on before I go forward. At the end of the day the guy says, screw it, I'm going into the monastery where I know I've only got the abbot to bother me and not the rest of the troops.

But let me talk about the Crow rate. On the Crow pay-out you said $1.6 billion, and you made the pay-out. At the end of the day, how much is not going to be transferred through? I understand that some won't be. Where does that go? And on the 95% cap - and you save 5% - is it their mentality that they had better spend the 95%, then, or is there anything wrong with 90%?

I understand that 5% element, but I come from a municipal background, and we didn't pour any salt in the bloody river, I can tell you. We were lucky to be able to buy the bloody salt in the first place.

Some hon. members: Oh, oh!

Mr. Collins: I can see a lot of good things in what you're doing, but I hope that at the end of the day we all know we're going in the same direction.

I commend you. I think this is the right process. It's just those kinds of things like the Crow pay-off - you know, you have that $309 million that's going to carry over. Do you have any idea how much of that's not going to be paid out? And where does it go? Likely back into federal coffers.

Mr. Kam: The authority granted by Parliament for that program was to spend up to $1.6 billion. The allocation by province as negotiated - the province has actually exhausted that $1.6 billion. My understanding is that the intent would be to spend as much as possible of the $1.6 billion. As you can understand, it's a very complex program. There are some 250,000 applicants. They've had to hold back a small amount as a contingency to allow for dealing with the arbitration process, the review process, that's involved in certain applications.

It is my understanding that they were holding back at the most $3 million or $4 million. The program administrators are seeking to spend as close as they can to the $1.6 billion without going over it. Of course they cannot go over it, because that would break the law, so they have to try to manage that complicated program to get as close as they can without going over. If they don't spend the total $1.6 billion, of course the rest goes back to the consolidated revenue fund, and it remains there. It's not drawn out.

.0955

But there's no intent to minimize that. The program was designed to spend the full amount.

On your other point, the carry-forward issue, whether it should be five or ten or unlimited, one could argue that for good management practice it should be unlimited, that whatever you lapse you should be able to carry forward to the next year. The constraint the government put on that, the 5% -

Originally in fact it was 2%. It was a 2% carry-forward, and then it was moved up to 5%. The constraint the government was concerned about was the fiscal implications. If all departments carried forward 5%, didn't spend it this year and then all spent it next year, that would have a major impact, in the order of $600 million or $700 million, on the government's expenditure plan, and that could throw off the deficit track of the government.

They were very cautious in introducing this. First it was at 2%, then at 5%. I wouldn't be surprised if it were increased to 10% at some point, since the fiscal impact has been fairly smooth. Departments have not in total gone out and spent that extra 5% in the following year. They have basically been moving it forward, moving it forward, and maybe it will never get spent. It's held there as a hedge against unanticipated cost increases.

But certainly that argument, that debate, has been going on for years.

The Chairman: The clerk says there's a possibility of a vote. I don't want us to get caught. It will likely be a thirty-minute bell, if and when there is one.

I would like Dennis to explain the green book, the performance report one, because I think in particular there's one page in that, page 63, plus the large page, the second page 2 in your report, referring to Agriculture, the one I referred to a few minutes ago. I think that, along with the chart on page 63, does a lot of answering of what Bernie mentioned.

Dennis, go ahead and explain what this book does and says.

Mr. Kam: As I said at the outset, the government is proposing to separate the part III document into two documents, a planning document in the spring and a performance report in the fall. This is the first example of the splitting of that document and having a separate performance report in the fall. I believe sixteen departments agreed to produce these this fall as prototypes.

Our department was a prototype in the spring in producing a different type of part III document, one which had two separate chapters, a chapter on planning and a chapter on performance. This gives you another chapter on performance only about six months after the close of the fiscal year, as opposed to last spring's document, which reported on 1994-95 ten months after the end of the fiscal year. So you're getting a performance report several months earlier.

This document sets out the public accounts numbers for Agriculture for 1995-96. It seeks to relate back to our part III document for 1995-96 in terms of what we expected to achieve when we tabled our original planning document, our original plans for 1995-96, and what we actually achieved after the end of that year in relation to the money that was spent. As I also said earlier, over time we hope to refine and improve our objectives and goals and performance targets so when you get this type of document in the fall we'll be able to set out very precisely and very clearly what we said we were going to achieve in our planning documents and what we actually achieved in each business line and for the money spent.

The document is organized by activity. If you turn to the table of contents, we begin with a minister's message and then a departmental overview, which does set out the broad objectives we had for 1995-96, and what we achieved in general terms. Then we set out the activity performance. Section III is the corporate performance for the whole department. Section IV is the performance for each of the activities - research, inspection and so on.

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Annex A and B provide supplementary information. Annex A is the statutory annual reports that are required under legislation, which have normally been tabled with part III and will be tabled with the fall performance reports hereafter. Annex B contains several statistical tables, which are in some cases extracts from public accounts and in some cases provide more detailed information than is contained in public accounts.

In each case probably the key chapter, apart from the overall corporate performance chapter - Page 5, for example, provides an overview of what was spent compared to what was contained in the main estimates for 1995-96 for each activity. Page 5 is a neat little summary page setting out what the department spent on all of its programs over the year and what was anticipated.

Of course, the difference between what was spent and what was planned - there are a number of variations. We unfortunately did not set that up in a lot of detail here, I don't think. It's somewhere else. The major difference is the western grain transition payments program, the $978 million under PFRA. That was not originally in the main estimates for 1995-96. It's in footnote 2.

The Chairman: Could I walk through the way I would use this book? The members who have it might want to follow. If you don't all have one, you can watch with somebody. There's one in your office, but we don't have any more to hand out.

On page 5 of that green book, let's talk about the research branch, which is the very first one. Dennis, correct me if I'm wrong, but the original intention for the research branch was to spend $276,052,000. The reality was that the department spent on research and development $275,567,000.

Mr. Kam: That's correct.

The Chairman: Also on page 5, the total budget for the department was $2,561,420,000 for all the different branches.

Mr. Kam: That was expenditures.

The Chairman: That's right.

If we go over to page 10, that's the specific reference to research and development. There is the total pie of $2,561.4 billion, of which $275.6 million was research and development. Then the chart gives the breakdown of how the $275.6 million was spent: operating, capital, transfers, etc., including the number of full-time equivalents there.

If you then go over to page 63, to a chart that I think is great, we see the actual expenditures for research and development in 1992-93, 1993-94 and 1994-95. There are the estimates for 1995-96 that were shown on page 5, and then the actual. So the $275,567,000 shows up again. That's the actual, which is the pie chart and the other chart on page 10. So that's what happened last year.

As members, if we want then to talk to someone in our constituency about the intention for this year, we would go to the chart in the in-year update, which is page 2 of the handout we have before us today, which we referred to a few minutes ago. We see there that the total for research and development for this year is - Help me, Dennis.

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Mr. Kam: The total authorities are $283.7 million to date.

The Chairman: Where do you get $283.7 million?

Mr. Kam: Oh, sorry, the main estimates. The total authority, to include supplementary estimates, is $293.8 million.

The Chairman: The total authority is $293.8 million.

Mr. Kam: Yes.

The Chairman: So if we were to put another column here in the column on page 63 of that green book for the year 1996-97, that figure in there to date for this year would be $293.8 million.

The bottom line, then, is it's the intention of the department to increase spending on research and development from $275.6 million to $293.8 million in the year that we are now in. The comparison for all the different branches is there, and the breakdowns for how they took place are found earlier in this green book, and the intentions and the progress of the present year are in your update book.

Wayne, do you have a comment?

Mr. Easter (Malpeque): Yes, Lyle, I get where you're coming from. Does that $275,567,000 in the green book also include capital? Is that total?

The Chairman: Wayne, if you go back to page 10, you'll see it includes $36.6 million in capital.

Mr. Easter: Yes, okay.

The Chairman: There's a complete breakdown of the $275.6 million, including operating, capital, and transfer payments. It also includes four pages on the major activities that took place on that.

Mr. Easter: I have just one other question, Mr. Chairman - I was late; I had another meeting. So it's important, then, to have the in-year report. Will we get it at the same time as this? This is going to be March 31 and this is -

Mr. Kam: Correction.

Mr. Dick Robinson (Manager, Operational and Capital Planning, Corporate Services Branch, Department of Agriculture and Agri-Food): No, the performance report will be tabled around the end of October, at the time the public accounts are tabled. The in-year report will be tabled at the time that supplementary estimates are tabled, in the fall of that year. In this case, supplementary estimates were at the beginning of November, and the in-year report was tabled within a week or two of that, because it complements the supps.

Mr. Easter: Yes, thanks.

The Chairman: On the handout the officials brought this morning with the agenda on the second page, where it outlines the old system versus new system, it shows that the performance report is in October, and the in-year report in November.

Mr. Easter: Okay, thanks.

Mr. Robinson: Mr. Chairman, a comment was made earlier that it would be nice if the department was providing some kind of report on performance, based upon what was originally in a set of plans. I think the intent of this performance report is to do that. Our first effort at doing that can be reflected, if you wish, by looking at pages 6 and 7 of the performance report, the green book. What we did there in that particular figure - you'll notice one column is called ``strategies'' and one is called ``major achievements''.

As for the items under strategies, if you went back to the 1995-96 main estimates, part III - the year this book is reporting on - you will find a table that has these strategies listed. These are the things that we said, when we tabled the main estimates for 1995-96, we were going to attempt to achieve.

This is the first chance we've had an opportunity to report back on the performance for 1995-96, and in that case we have the column called ``major achievements''. This table summarizes that for the department, making a comparison of what we had planned and what we've achieved. The details of each of those achievements are listed there, with further references.

This is the first attempt at trying to bring together a set of plans. Then eighteen months later, after the year is finished - you've gone through the year, and six months into the next year - we would table a report on the success or failure of achieving the plans.

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The Chairman: Mr. McKinnon.

Mr. McKinnon (Brandon - Souris): We've been kind of going around what I was going to discuss, and that is making strategic long-term plans. With the government being what it is, there's no long-term stability greater than an election period where there may be some task masters coming into play who have different philosophies than we will have 15 years from now. I think the Liberals will be around for quite a while.

Philosophically speaking, I think that has to be a problem for you in terms of any rationalization and justification. I'm wondering how you're able to manage that in terms of upgrading the ability of the department to function.

Let's say you want to be able to manage the information with greater speed - just what you were talking about - and be able to reference and cross-reference the achievements. My impression in government is it's very difficult for a layperson to understand these documents. Until Lyle pointed it out in my language, I was quite lost when I started going through this on my own in the office. Maybe our committee should be spending a little more time just outlining the general format on how to approach, to a greater degree, the people around this table.

I think we have to accept the fact there's greater accountability for us as members of committees. As Bernie indicated, whether or not we have achieved what we set out to achieve is politically very difficult, in some cases, to get from a document like this. I'm making more of a statement than a question.

Mr. Kam: We very much welcome your offer to provide comments on the format presentation. We'd be very happy to get feedback because we want to improve this document. After all, parliamentarians are our primary clients for this document. If it's not useful to them we're wasting our time.

Mr. McKinnon: It is. I can see quite an effort has gone into this on your part. Maybe before we can understand the significance of your efforts, we need to have more dialogue with officials like you.

The Chairman: Mr. Robinson, do you want to comment?

Mr. Robinson: The whole purpose of the exercise in this improved reporting to Parliament is to address the concerns you have. First is the long-term planning of the department and second is reporting back on the success or failure of your program. The attempt through all of this improved reporting is to try to address those two issues.

On long-term planning, you're right, it's difficult to plan beyond an election cycle. The intent for part III of the main estimates, in the separate planning document that will be tabled in the spring, is to go forward three years. So instead of seeing only what's happening this year, the document we tabled last year explained, for instance, the planned expenditures of the Department of Agriculture and Agri-Food to 1998-99, three years down the road. So you are getting a longer-term view with the intent that the plans are there.

The second part, which is the reporting back the gentleman here referred to, is in the performance report. As I said earlier, this table is an attempt to match up achievements against the other. So hopefully we are addressing your concerns. If we're not, as Mr. Kam has pointed out, we would certainly like to hear, because our purpose is to prepare these for you so that you can make the best use of them in your job.

Mr. McKinnon: It's a living and breathing document. When you get into it there's a philosophy. There are goals and objectives and there's accountability.

The Chairman: Your pages 6 and 7 talk about the strategies that were in the advanced proposal and the major achievements. What criteria is used to evaluate whether those strategies have been achieved or not? How is that done?

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Mr. Kam: That is a good question.

The Chairman: The Auditor General, for example, will make a comment, and certainly did recently make some comments and raise some questions, about the western grain transportation settlement. Is that the role of your department, or does your role go only to the extent of recording what people say they're going to do and then recording what people have done and not making a judgment call on whether or not there was much connection between the two and an achievement was made?

Mr. Kam: Well, we have an obligation to evaluate all of our programs on an ongoing basis to ensure they continue to be efficient and effective. That's the pat answer.

It very much depends on the nature of the strategies. The assessment of certain strategies can be very factual: they said they were going to do something and that was done. We can report that it happened.

When we're trying to change behaviour or change the way the sector is working, for example, it's not so transparent, in some cases, what sorts of effects your programs are having. Periodically we will have to undertake specific evaluation studies to try to assess the strength of the relationship between our programs or our programming and the impacts that are seen out in the economy, out in the sector. Those evaluation exercises involve some judgment calls as to the key considerations.

Ultimately the judgment about whether a program is effective or not is a policy judgment by the government and by the ministers as to how much is good enough, in a lot of cases, in terms of programs.

We hope over time, as I said earlier, to move from strategies that have milestones, or very specific outputs, to achievements or targets that are more qualitative and quantitative in nature and commit to achieving an outcome in the economy or an outcome in the sector. As opposed to ensuring a meeting takes place or an agreement is signed, they would ultimately be looking beyond an agreement to ask: What's the impact of that agreement? Can we set some targets there in terms of the impact? Can we report on what sort of impact that has?

Those are difficult questions. The government's been grappling for some 20 years with this problem of setting performance targets and then measuring and reporting on them. There have been a number of false starts over the years within the budgeting process to try to home in on that objective.

We've been trying to make another effort in the last two years, through the business planning process and the expenditure management system, which will probably be more successful than in the past. But as you said, there's judgment there. It's not a science. It's often a question of seeing what works for a reasonable person, testing it, validating your measures and then coming back and saying, well, that didn't work so great; there are confusing indicators there in terms of what it really means, and we have to refine. It's an evolutionary process.

This effort started actually in the early 1970s, trying to promote objective-setting and performance reporting.

The Chairman: Mr. Calder, do you have a question?

Mr. Calder (Wellington - Grey - Dufferin - Simcoe): Yes, thanks very much, Mr. Chairman.

Dennis, I really appreciate this process that we're going through here right now.

In my other life, at one time I used to be a hospital corporation treasurer, so I'd like to go back to your talk about the 5%, if you can come in under budget. That works out to about $1.2 million a year that, if you did come under budget, you could roll into an account some place.

I have a couple of questions on that. I would like to know where you would put that savings, what strings are attached to those savings and if those savings are accumulative. Can you roll 5% each year into, say, a capital account or something like that? This is something that could be reflective on cost of recovery.

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Mr. Kam: To answer your last question -

The Chairman: Well, 5% of the total budget would be more than $1 million.

Mr. Calder: We're working with -

A voice: That's why you're not working as an accountant.

The Chairman: Did you voluntarily quit or - I'm going to pay for that comment.

Mr. Calder: Okay, so it's more than that. Anyway, it's a good start. It's more than I'll ever see in my lifetime.

What would be the strings to that? If it is an accumulative effect over the years, it would be a lot of money.

Mr. Kam: There is a cap. You can basically put it in the bank, in a notional account held by the Treasury Board. The maximum on that account is 5% of the main estimates' operating budget. For our department for 1995-96, 5% of our main estimates was $33 million. That's what we can carry forward, and we can't accumulate more than that. That's the cap.

As I said, it's a notional account. We have to go to the Treasury Board and seek authority to draw down that account. We report it in supplementary estimates and set it up in supplementary estimates, which we just did in supplementary estimates (A). We had $33 million there related to the carry-forward of operating funds from 1995-96.

Mr. Calder: And all you can have there is $33 million?

Mr. Kam: That's right.

Mr. Calder: Okay, now that you have $33 million, what do you do with it?

Mr. Kam: It's allocated back to the responsibility centre managers in the department on the basis of the lapses they reported, the surplus funds they reported in 1995-96. It's free to them, as I said earlier, to recuperate some of the plans that went off the tracks in 1995-96. So for a project that was late they can carry the funds over, or some investments or other capital equipment they were planning to buy but there were delays in the tendering process or the delivery. They can buy it the next year.

Some of it will be used to deal with unanticipated pressures, so it will be held as a contingency. Our experience in the last several years is that we haven't effectively spent it. The next year we've lapsed the same amount and we've continued to carry it forward. The last two or three years we've continued to lapse in that same order of magnitude, and we've just been rolling this forward one year at a time.

Mr. Calder: It makes a very interesting scenario for me. The next time I have to go back to the minister and ask for extra money, I know he has $33 million sitting in a reserve fund.

Mr. Kam: No, it's not a reserve. We've allocated it to the individual managers.

It comes down the question of incentives again, as we talked about earlier. If you do not ultimately funnel those funds back to the managers who lapsed the funds, you remove the incentive for them to carefully manage their money. Once the deputy or the minister says they can't have it, after a while the managers will learn that if they lapse anything, they will not be able to carry it forward. It will be taken away from them, so they'll just spend.

That's the balance you have to work out there. If you want it to work as an incentive, you have to allow the managers who generated those funds to use them in the following year. If you take them away, it won't happen.

The Chairman: If you don't do that, the ``use it or lose it'' philosophy comes back and you gain nothing.

Mr. Kam: Rather than ``use it or lose it'', restriction by Parliament -

The Chairman: Mr. Calder's task, then, is to go to the individuals in the department and say that he knows they have money left over, so he'll help them use it.

That's the tactic, Mr. Calder. I thought you noted that very clearly.

Mr. Collins.

Mr. Collins: Mr. Chairman, as I go through this, the more time I spend with it, the more I appreciate all the work you've done.

In your comments, did you say that 16 departments were going to be asked to do this?

Mr. Kam: There were 16 departments that did table such a document in October. Eventually all departments and agencies will be tabling, just as all departments and agencies do a part III of the estimates.

Mr. Collins: So all 16 were asked to table this working document.

Mr. Kam: That's right.

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Mr. Collins: On this one here, if I might just go to your page 1, on MII, the matching investment initiative, you had a shared arrangement in which you were going to go dollar for dollar with private investors. You had a cap on that. I see $24.5 million. I'm sure you would have projected it and said that you would be able, up to this amount of money, to - I just don't remember what that was.

Mr. Kam: There are funds budgeted each year in the planning period for that and -

A voice: They'll gross about $35 million by 1999-2000.

Mr. Collins: Well, this one here just shows $24.5 million. Here's the nice thing that I like about it. I went back - as Lyle did - to another page to see your breakdown of how that MII was spent. All I would like, when I come through here, is for there to be a little reference page saying that for this reference, I should turn to page such-and-such. Then I don't have to do all that.

Mr. Kam: Yes, I understand.

Mr. Collins: You people know how you put the book together, but I kind of finger and poke here.

Mr. Kam: Yes. We could do some cross-referencing. For example, Dick just pointed out to me that chapter 2, page 7, of the part III that was tabled last March set out our plans for the matching investment initiative. We anticipated, for 1995-96, to allocate $10.6 million in the matching initiative. That's the department's share. This implies that we were anticipating about $21 million in total to be spent. In fact, $24.5 million was spent under that program. It goes to the department and the partners.

Mr. Collins: Yes. It's nice to know where those investments are going in terms of the research too, because you break that down in your summary, which really is very helpful. As Lyle said, if I want to go back and discuss this with somebody who's wondering what we're doing on these matching initiatives, then it's pretty clear. Here's where we're going. Then we set our targets.

But I must say that I commend you for the overall document. I guess we just have to work through it.

Again, at the end of the day, how do we overcome - I'll go back to the PFRA thing because it will bother me until hell freezes over that we spend that kind of money and then somebody can tie us up on an issue that should be dealt with.

I wish the Auditor General or somebody would be able to come back to say that this is unreasonable or to ask whether this made sense. That's the thing that I guess is the biggest irritant for me.

This is not like that, because I think this is the right way. You have those years advanced. You're doing the long-term objectives. You're keeping us posted. I think our chore now is to make sure the thing works with you.

How do we overcome that?

Mr. Kam: The PFRA situation?

Mr. Collins: I used the PFRA, but I hate to bring that one up.

A voice: It's a good one.

Mr. Collins: You know what's going to happen. Consider the PFRA now if we go under Bill C-30. I hope that's the right number. If environment comes through and has some of the impact it could have, then there could be some downsizing out there in our pastures. Then we would have to generate those funds somewhere else. So we're going to take those cattle off that pasture land that should be there and that's well managed. Are we going to shove them back on some guy's agricultural land on which they maybe shouldn't be?

Mr. Kam: Right.

Mr. Collins: We seem to be in a silly world here.

Mr. Kam: I guess there's no easy answer to that. Certainly in the first instance, when new policy or new legislation is proposed, there is an onus on departments to consult extensively to make sure that all the repercussions and implications of any particular proposal are identified and considered. As government gets more complex, those implications become more scattered and more complex as well. Certainly as for the requirement to coordinate across government, as things become more interdependent, this becomes more important. One has to touch so many bases that, you're right, it does become quite a game sometimes.

Mr. Collins: But I think this is going to be the key. You're very clearly focused on not getting away from what your objectives and goals are. If everybody's doing this, then they should be reviewing theirs in relation to what you're doing so that we're not all off on our own merry chase.

Mr. Kam: Yes, that's true.

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Mr. Collins: I like this, because this is going to keep us really focused on where we're going. We'll be able to take action that should be taken in the short term rather than in the long term.

I have just one other question. Did you say something about 16 months? I may have written it down wrong. You mentioned something about 16 months and I just jotted it down.

Mr. Kam: What I meant is this document was tabled at the end of October and the fiscal year ended at the end of March, so it was about 18 months after the start of the fiscal year that you got this document. Normally you would have gotten it much later; you would not have gotten it until the following February, when the main estimates are tabled. By separating this from the part III and tabling it in October, you're getting it several months in advance of the traditional process of documentation that was used for many years.

Ideally this should be tabled about the time of public accounts, so you'd have the overall public accounts documents and the performance report underlying those financial numbers set out in public accounts, and then you could get the program implications.

The Chairman: Mr. Landry.

[Translation]

Mr. Landry: In the document that you tabled here this morning, I read on page 9 in the French version, under the heading "Vote 10 - Grants and Contributions", that grants were given to individuals and organizations in support of grain transportation reform for an amount of $59.2 million. On the following page, I read that payments in connection with the Western Grain Transition Payments Act total $309 million. If I add these two figures, I arrive at $368.2 million. Could you explain to me what those two expenditures are all about?

[English]

Mr. Kam: The difference between the two is that the $309 million is a statutory payment pursuant to authority already granted by Parliament under the Western Grain Transition Payments Act. We simply provide a forecast. The authority to spend those funds has already been granted by Parliament through legislation, and we're reporting, through the statutory item, our current forecast of what we expect to spend under that program.

The other payment, the grants to individuals and organizations in support of grain transportation reform, is a voted item that Parliament must authorize through the Appropriation Acts. It's pursuant to the government initiative to set up a western grain adaptation fund to fund the transition adaptation requirements as we move away from the Crow rate and the pooling changes and allow the industry and the farm sector to adjust to that.

So they're two very different programs.

Mr. Landry: Okay.

The Chairman: I think that was Mr. Landry's question: are the $59 million and the $309 million going to the same people?

They're two separate programs. The $309 million is the direct payment to producers as part of the $1.6 billion. The $59.2 million is adaptation money that it's been felt needs to take place as a result of the ending of the western grain transportation payments.

Mr. Kam: Right.

The Chairman: Mr. Easter and then Mrs. Ur.

Mr. Easter: I have two questions, Mr. Chairman.

First, there's no question this is great information. Even if you sit on the agriculture committee, sometimes you lose sight of where you're at, what was originally proposed and so on. So it's great even from the standpoint of a quick review of where you're at in terms of the number issues you're involved in.

But I would like to know if there is a greater cost to us. Are we now pushing more people into administrative positions or whatever in order to accumulate the paper to come up with these kinds of reports?

Mr. Kam: I can't give you a general answer to that question. I know in our particular case, no, we're using the same number of people. Indeed, we're using fewer people in our finance function than we did three or four years ago. We've had to downsize, as all departments have.

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Dick here is the primary author of this document. He coordinates across the whole department and seeks input from the various branches. We have basically one primary author who does that. He did the part III and he does the part III of the planning document as well.

So we're pretty lean when it comes to that. I can't speak for other departments.

Mr. Easter: That's fine.

Secondly, as you go through the report, I guess to a certain extent, under current government policy, the departments somehow are becoming maybe a little bit less relevant than they were, in that we're now putting in place agencies. I can think of five at the moment. There are the Canadian Wheat Board, the Canadian Dairy Commission and the Farm Credit Corporation, which are corporate entities; there will be the Pest Management Regulatory Agency under Health, but that directly relates to us; and there's the single Food Inspection Agency.

In this particular document we have here on FP and I, or food protection and inspection, will we have the single Food Inspection Agency? And how can we get information on those other areas of the corporate sector? Do we have to go to those annual reports?

What I'm saying is quite a bit of stuff is missing from here, as we go to an agency approach within government, and with corporations directly related to this industry out there.

Mr. Kam: Those are good questions that I don't have full answers to.

The estimates documents historically have been devoted to or focused on explaining the resources, the appropriations, being sought from Parliament. Of course the crown corporations, the Wheat Board and the FCC, do not seek appropriations from Parliament and therefore have not traditionally been covered in the estimates documents. They do not produce a separate document nor do we address them explicitly, because they do not require appropriations.

We do from time to time make reference to them in the documents to the extent that they're related to or involved and implicated in some of the policy initiatives. One could address those.

Indeed, a few years ago the Auditor General recommended a stewardship concept whereby we should address all instruments that are used by a minister to pursue his mandate, including the crown corporation instruments. But at this point we haven't done a lot of that.

Your question about whether the new agency will be in this document or in a separate document hasn't been answered yet. There may indeed be two documents like this, one for the department and one for the Canadian Food Inspection Agency. The minister undoubtedly will have to decide how he wants to relate those two documents, but that hasn't been decided yet.

Mr. Easter: As a parliamentarian, one of my biggest areas of concern, which we've talked about in this committee, is cost recovery. Cost recovery is certainly in the PMRA, the single Food Inspection Agency and no doubt some others that will be developed. Those are the ones we have to put our finger on.

I would certainly like to see us, as an agriculture committee, recommend that those agencies be brought under this system somehow. I would prefer to see them there. If they're related to Agriculture and Agri-Food Canada, then they should be in that report so it's all together.

I'm still disappointed that we don't have an annual report of the Wheat Board and so on, the way we used to have it, but we don't. I'd like to see all that stuff tied together.

I'm basically saying the agencies have to be incorporated, because we have to be able to watch that cost recovery.

The Chairman: I'd like to follow up on that before I go to Mrs. Ur.

If I understand it, in a couple of years page 14 of the performance report, which is on inspection and regulation, will still be in the performance report for the year we're in right now, because the agency is just being formed, but in the future, that section and that $248 million, or whatever amount is in there now, will be in the agency.

Mr. Kam: That's correct.

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The Chairman: Wayne has a valid point. That section will not be part of the main estimates when they come forward from the ministry of agriculture, or will it? Next spring we'll do the main estimates, and at that time we'll have the opportunity as a committee to talk about the years two and three ahead of that. Then as we go through the year, we'll get the performance report and the in-year update. Will those estimates, budgets, etc., of the agency be part of this report from Agriculture and Agri-Food Canada in the future once the agency is formed?

Mr. Kam: You have several questions.

First of all, the agency's appropriation requirements will be in the main estimates as part of the Department of Agriculture and Agri-Food. Right now we have the Dairy Commission in there. We'll have the food agency as a separate panel within the estimates of our minister. That will still be there, and the estimates of that agency will be referred to this committee for review.

On the question of whether they will be covered in the same supplementary books, the performance report or the planning document, or whether they'll have a second planning document and performance report, is still under review. We don't know the answer to that, but either way there will be planning documents and performance documents produced for the agency, and they will be referred to this committee.

The Chairman: So it can be our understanding that we will have the same opportunity to comment on the projections and activities of that agency in the future as we have had to comment on the FP and I branch at the present time?

Mr. Kam: Yes.

With respect to PMRA, it is part of Health. But I know committees can make bids to have agencies referred. It's a custom, so you could negotiate with the committee on health to decide where that's referred. They're normally referred to only one committee.

The Chairman: Thanks. That clears that up.

Rose-Marie Ur.

Mrs. Ur (Lambton - Middlesex): I looked at page 5 and page 63. That's a starting point for non-accountants to understand what we're doing here. I really find that I can understand where you're going. The words aren't there, but the graphs are there. It's certainly a lot easier to read.

You may not be able to expand on this, but in this briefing your operating budget is 9.1%. Comparable to other departments, there isn't any sheet on how you functioned over the years. Are you up, down, keeping the same? What is the cost of your operating budget over the past years? Has it been stable?

Mr. Kam: It has been declining. We may have a table somewhere that explains it to you.

Mrs. Ur: I'll ask another question while you're looking for that. To expand on the chairman's question on your self-evaluation, it's much like food inspection, I always thought. If you're hired by the company, you certainly aren't going to reject too many carcasses if you're part of the group. It's much the same as presenting a report.

Have you or the department ever thought of doing an outside evaluation of whether you're really attaining your goals within the department? Would that be more valuable, or would the cost offset what you would recover?

Mr. Kam: In many cases the evaluation studies we undertake are done by consultants. They are not done in-house. Of course, the consultant does in a sense work for the department, but the terms of reference -

Mrs. Ur: That's what I'm saying. You're saying he works for the department.

Mr. Kam: You also have to keep in mind that these reports are publicly available. They're accessible. They're subject to scrutiny by the Auditor General, by the general public, by academics, so they have to be as rigorous as they can be and they have to be subject to audit and scrutiny. I would hope they are as objective as possible.

Mrs. Ur: You were also saying that you have your main estimates and then you can go back to the Treasury Board for supplementary funding. When you go back there, is there a criterion you have to meet as the Department of Agriculture and Agri-Food, or can you go in there and request x dollars? Is there someone knowledgeable within the Treasury Board as to whether you could get those funds?

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Mr. Kam: The Treasury Board is organized by portfolio. There are a couple of officers who in a sense specialize but are dedicated to working on material submissions coming from Agriculture to the Treasury Board. So there are people who do understand our programs in the Treasury Board and who therefore can facilitate and explain to the Treasury Board the context of our requirements and our program context.

As I said earlier, the funds have been allocated in advance for very general purposes. For example, through the budget planning process of the Minister of Finance, funds were set aside for rural development adaptation funding. Lump sums were set aside with a general purpose associated with them.

The department was challenged with designing contribution and grant programs that would respect the intent of the government, and of course set up in a lot of detail exactly how the money was going to be spent - who would be eligible, what type of projects would qualify and so on.

That is spelled out in detail and submitted to the Treasury Board for approval. Only once Treasury Board approves that program design and also authorizes us to include the funds in the supplementary estimates can we actually commence a program. But the funds are earmarked at a high level by the Department of Finance and the Minister of Finance. Then we work out the detail and seek approval from the Treasury Board within that context.

So we have general direction, and we work out the details for the Treasury Board. As I said, there are people at the Treasury Board who understand the Department of Finance, who understand their programs and can help the Treasury Board ministers and central agencies understand our requirements and the context for them.

Mrs. Ur: I'd like to expand on Mr. Easter's concern as to cost recovery and some kind of documentation so that it's not just the one cost recovery that hits a certain individual, numbers that keep falling down on the same individual. If there's going to be some kind of documentation, whether it be from Health or from Agriculture and Agri-Food, that we can say, well, it's not just this one thing that's costing us but it's the multitude of cost recovery, we can go back and say, hey, I think we're dumping a little much on this certain sector, and let's share the burden. It's affecting all of us - so that we can have these numbers to justify our concerns.

Mr. Kam: I know that's an issue that's been raised by several people, including the chairman. It's being looked at. I know there are consultation discussions under way with Treasury Board as to how that analysis could be done. I think it's recognized that there's a gap in information.

Mrs. Ur: It's very important.

Mr. Kam: Yes. It's a question of how to do it. It's a very complex undertaking.

The Chairman: This committee and its members and a number of other people will have the opportunity on Tuesday morning to, may I say, drive that point home to the Treasury Board. I looked up a few minutes ago and saw Marcel Massé going by the door, who looked in quickly. I thought we missed a chance; we should have captured him right there. However, others might like to be present for that discussion. So we'll have members of the Treasury Board before us.

We're soon going to have to wind up, but I've been asked, Dennis, if you could send to the committee a breakdown of the one number Monsieur Landry mentioned in your document this morning in the summary of the 1996-97 supplementary estimates, the $59,200,000 in grants and contributions. Can you send us a breakdown of what that's for, where that's going? Or do you have it with you?

Mr. Kam: We have it with us.

The Chairman: Just while you're getting that, as we know, members, there's a review going on, and part of these documents are part of a new trial to report to Parliament. Our colleague Ron Duhamel has been leading some of that activity. He has asked the chair of each of the 16 committees using these new documents as a method of reporting to Parliament to get back to him.

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I'll read the one line that the chairs need to get back on: ``The focus of this evaluation, then, is to determine whether the fall Performance Reports'' - which is the green book we have before us - ``given their usefulness to Parliamentarians and the costs to produce them, should be adopted permanently.''

I think Mr. Easter's question to Mr. Kam answered the question as far as the cost is concerned, in that they are providing these with equal or less personnel than in the past.

If I understand the comments this morning - and correct me if I'm reading you wrong - you people are finding the green book and the in-year report useful. Now that we know it's being done for the same amount or less than the previous method of reporting, would there be any objection to my getting back to Mr. Duhamel and saying that we as a committee are pleased with the comments the officials have accepted from us this morning on some pushing and poking with this type of reporting? If I hear no major objection, that's what I will report back.

Steve, do you have the breakdown of the $59.2 million?

Mr. Steve Silcox (Director, Planning and Resource Management Division, Department of Agriculture and Agri-Food): Yes, I have, Mr. Chairman. It consists of three components. The first component is compensation for the feed freight assistance program being wound up. That totals $24.2 million.

The Chairman: There were others than that, but that's what this $59.2 million is used for.

Mr. Silcox: Well, $24.2 million of the $59.2 million is for feed freight assistance adjustment.

The Chairman: There was other money earlier in the main estimates, but this is the breakdown of the additional $59.2 million.

Mr. Silcox: It gets a little more complicated than that. Because the payments have been made as grants, it's $24.2 million of grants. The main estimates show roughly $11 million of contribution money. In effect, we have had to ask Parliament for grant authority for $24.2 million, but the $11 million is applied against the grants because we need parliamentary authority to pay grants.

We have $25 million for the changes in the Canadian Wheat Board cost pooling. The remaining $10 million is towards the Saskatchewan Association of Rural Municipalities, for sustaining and upgrading rural roads associated with the changes to the Western Grain Transportation Act. So that totals $59.2 million.

The Chairman: Okay. Mr. Collins.

Mr. Collins: I'm the chairman of the committee, and I believe we had $20 million or $21 million allocated: $10 million to SARM - $5 million to the provincial government, and $5 million to SUMA and SARM. Where would that other $10 million show up?

Mr. Silcox: We also have contribution funding as part of supplementary estimates. I could find details on that in just a second.

Mr. Collins: While we are waiting, Mr. Chairman, may I make one comment? I really think we should go on record as a committee acknowledging the work of these officials, and certainly of Dick and whoever else was involved. I think they've done an outstanding job in preparing a document that has long been overdue. It's going in the right direction, and I commend you.

Mr. Silcox: Indeed, maybe not all the money you're talking about will be this year.

Mr. Collins: That's right.

Mr. Silcox: We also have a contribution in the supplementary estimates, which I believe is listed. Contributions under the Canadian agri-infrastructure program are $4.2 million, and that's a contribution. That's for Saskatchewan and Alberta.

Mr. Kam: I'll continue with another question that's still on the table concerning what's happening to our operating expenditures. As we reported in our part III, in chapter 2, page 5, our operating and minor capital funds are expected to decline by 13.6% between 1996-97 and 1998-99. We are downsizing.

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The Chairman: If I could then go, Dennis, to the in-year report - that page we referred to earlier with all the numbers, there's a total operating expenditure listed at the bottom of the column of $834 million, operating.

Mr. Kam: Yes.

The Chairman: That's $834 million - and you're saying that's less than that column was the year before?

Mr. Kam: I'd have to verify that. What I was saying is that it will be declining from there down through 1998-99.

The Chairman: Okay. It's going to decline 1998-99.

Mr. Kam: But it's also been declining, because there were general expenditure reductions across government starting in 1995-96, so I would think this number is less than that for 1994-95. It's not a straightforward calculation, because there are a lot of ins and outs, as we have new program funds allocated to us. Those are administered with incremental funds occasionally, and so one has to hold the base constant, because it -

The Chairman: Okay.

Mr. Kam: We'd have to work up an answer for you, if you wanted to see it tabulated.

The Chairman: Again, it's just that it gets into some of the confusion. Are we comparing apples and apples? That's all.

Mr. Landry.

[Translation]

Mr. Landry: This morning, we were given a lot of figures. I would like you to tell me whether, in the light of all the numbers that we were given for fiscal years 1995-96 and 1996-97, some savings are anticipated for 1996-97 and what would be the order of magnitude of these savings.

[English]

The Chairman: Mr. Landry, are you talking about overall budget, or just operating?

[Translation]

Mr. Landry: The overall budget.

[English]

The Chairman: The overall budget - that would be page 63, would it not, Mr. Kam? You'd be looking at page 63 to see the last number of years, and then the chart from the in-year report for the present year.

Mr. Kam: Yes, you're correct. The actual spending for 1995-96 was $2,561.4 billion, and the plan for this year is $2,345.4 million. That's a reduction of slightly over $200 million, year over year. Those are our plans.

The multi-year plans were set out in the part III, where we indicated that by 1998-99 our budget would be down to about $1.6 billion, from the current level of $2.5 billion.

The Chairman: What did you say it was for this year, $23 what?

Mr. Silcox: It was $2,345 million.

The Chairman: Okay. I know where you got that figure, but I don't see it on that -

Mrs. Ur: It's on the last page of this.

Mr. Silcox: It's from the reconciliation sheet in the package.

The Chairman: Okay, right.

Mr. Kam: It's also on page 65, appendix A, of part III.

The Chairman: All right. We're going to have to give the room over to another committee. I want to thank the officials for coming this morning.

If I could sum up, it looks like as a committee, in March of each year, we receive the main estimates. At that time we have an opportunity to comment on the closest projections to the year coming ahead that will start in April of the year when we receive the main estimates in March.

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At that time, when we receive them, as a committee we have an opportunity to talk about and to make comments on the projections for the second and third years, that are also commented on - In October we get the performance report, like this green book, on what happened in the previous year, and then in November we get an update on what's happening in the year we are in.

I think the challenge and the frustration for committee members is to know how and when as committee members we can influence the expenditures in year two and year three, which are the projections of the direction of the department.

Our opportunity to do that is there every day by speaking to the minister or sending messages as government members, opposition members or whatever, but it's also there in the months of April and May, when we review the estimates to make sure that we take more of a look at the projections for the following years than we maybe have sometimes in the past. And we can send our messages as committee members then. In simple terms, the message is whether we want to suggest that more be spent on research and development and less somewhere else or whatever, realizing the fiscal restraints as far as the size of the overall pie is concerned. It's the make-up of the pieces of the pie that we can have some influence on.

If that's a fairly good summary, I thank you very much again for coming before the committee this morning.

Everybody knows where you are, and members, please do not hesitate to talk to any of these gentlemen as far as clarifications go.

The meeting is adjourned.

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