Senator Marshall: Yes.

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Hon. Elizabeth Marshall: Honourable senators, my question is for the Leader of the Government in the Senate. Senator Gold, we are having problems accessing some of the government’s websites. The two we are working with are Canada Revenue Agency and Statistics Canada, but I understand it is not confined to those two departments. There is a message on the Government of Canada website that says there is a problem with cybersecurity vulnerability.

Could you give us some information as to what is happening, the severity of it and, especially, how long you think this problem is going to last, since we are going to be adjourning for six weeks?

Senator Marshall: Thank you very much, Senator Gold. Could you also find out if there is any information about the magnitude of the work and the cost? I think there is about $60 million in Supplementary Estimates (B), but based on what I’m hearing in the media, the magnitude of the problem is quite extensive so $60 million doesn’t sound like a lot of money. If there is any additional information you could find on that, it would be appreciated. Could you do that?

Hon. Elizabeth Marshall: Thank you, Senator Gagné, for your comments on Bill C-6 and Supplementary Estimates (B).

Honourable senators, Bill C-6 is requesting authority to spend $8.7 billion. To support Parliament’s consideration and review of this $8.7 billion, the Treasury Board president has tabled Supplementary Estimates (B), which provides information and details on the spending authorities requested.

If Bill C-6 is approved by Parliament, this $8.7 billion will bring the total spending approved by appropriation bills this year to $176 billion.

In addition to the $176 billion approved by appropriation bills, the government already has authority to spend another $230 billion this year, which has been approved by legislation other than appropriation bills. This $230 billion is called statutory expenditures and is authorized by various pieces of legislation, such as the Financial Administration Act, the Budget Implementation Act, 2021 and the Canada Recovery Benefits Act.

These statutory expenditures are included in Supplementary Estimates (B) for information purposes only. The Parliamentary Budget Officer, in a recent report, said there is currently no standing parliamentary review mechanism in place for statutory expenditures.

By providing spending authority in legislation other than appropriation bills, the government does not have to annually request parliamentary approval for spending because parliamentary approval has already been given for these expenditures.

It is interesting that over the past number of years, “statutory” expenditures that are approved by various other legislation actually exceed the expenditures approved annually by appropriation bills. For example, if Bill C-6 is approved by the Senate this week, $175 billion will have been approved by appropriation bills this year, while $230 billion in expenditures will have been approved by legislation other than appropriation bills.

Even more interesting is that statutory expenditures are included in the estimates for information purposes only, as I’ve mentioned. There is no standing parliamentary review mechanism in place for these statutory expenditures. When we say that we are studying the estimates, it means that we are studying less than half the expenditures presented in Supplementary Estimates (B) because 58% has already been approved by Parliament.

Honourable senators, I have spoken many times inside and outside of this chamber of the difficulties in tracking government expenditures. One of the problems is that the information in these estimates documents does not align with the information in the budget.

For example, the budget this year is forecasting expenditures of $497 billion, yet Supplementary Estimates (B) disclosures spending of only $405 billion. There are several reasons for this discrepancy. For example, the Supplementary Estimates (B) document we are studying does not include all of the new budget initiatives.

In other instances, the Supplementary Estimates (B) document does not include certain expenditures authorized by the Income Tax Act, such as some of the COVID expenditures.

Regardless of the reasons for the discrepancy, it is difficult to track government expenditures. The government has tried to reconcile the $497 billion in the budget with the $405 billion in the Supplementary Estimates (B) document by providing a chart or reconciliation to explain the difference. Senator Gagné referenced this in her speech. While the chart is somewhat helpful, it is confusing since there is no recognition of additional expenditures expected in Supplementary Estimates (C), which are expected in March.

In addition, the chart summarizes a number of transactions, all of which must be reviewed in order to understand why the budget includes $497 billion while the estimates document only includes $405 billion. In essence, a chart placed in the introductory section of the Supplementary Estimates (B) document is no substitute for an estimates document that is properly aligned with the budget.

In 2017-18, former president of the Treasury Board Scott Brison enthusiastically undertook an estimates reform project and piloted several changes to the estimates documents. He met with the Finance Committee a number of times to discuss the project. Parliamentarians were provided with the opportunity to participate and provide feedback.

Unfortunately, successive presidents of the Treasury Board did not support the initiative, and based on the comments of the present minister last week, the estimates reform project is over, and we have returned to the old ways of preparing the estimates documents.

The COVID expenditures, in particular, further complicated our review of government expenditures since government did not provide parliamentarians with the information they needed. COVID expenditure reports were initially provided in April 2020; then they ceased in August 2020; then they resumed again in April 2021; then ceased again in July 2021.

The government itself recognizes that it has a problem. Its own website asks a question: “Do you understand the process the Government uses to spend your tax dollars?” And the website also provides the answer: “If you’re a little foggy about it, you’re not alone.” That is the way it is when you are reviewing government expenditures.

To further complicate our review of the Supplementary Estimates (B) document, the government has yet to release the public accounts for the last fiscal year. Actually, I think they were released about two hours ago, now that we have finished our review of Supplementary Estimates (B).

The public accounts are the financial statements of the government, which have been audited by the Auditor General of Canada. It includes information on expenditures, revenues, debt, contingent liabilities and other financial data which is valuable in assessing appropriation Bill C-6 and the supplementary estimates document which supports the bill.

Historically, the public accounts provide financial and other information as at March 31 of a fiscal year, and have traditionally been tabled in parliament during the fall sitting. For the past 11 years, the public accounts have been tabled seven times in October, twice in November and three times in December. The three December tablings occurred since the 2015 election, when the current government came to power. This is a government that continually tells us it is committed to openness, transparency and accountability.

The former Parliamentary Budget Officer said recently that the public accounts should have been at the front end of the current four-week sitting. He went on to say that how the money was spent last year will help inform debate about the requests for more funds.

The late date of the tabling of the public accounts raises another concern. Once the minister tables the public accounts, she is required to table the Debt Management Report for last year within the first 30 sitting days after the public accounts are tabled.

By delaying the release of the public accounts until today, government is able to delay the deadline for the release of the Debt Management Report. Since the public accounts were released today, the deadline for the tabling of the Debt Management Report is now late March. Imagine. The Debt Management Report for the year of the pandemic, when an incredible amount of debt was assumed, may not be released until March 2022, a full year after the end of the fiscal year.

In addition to government’s withholding of the 2021 public accounts, government has yet to release the departmental performance reports. These reports are usually released in the fall and would ordinarily have been available for our review of Bill C-6 and the Supplementary Estimates (B). Treasury Board released them, I think, December 7 of last year.

However, Treasury Board officials told us that government does not plan to release the departmental results report until January. Since we do not see it until January 30 or 31, we are going to be waiting until that time to get the departmental results reports. Without that information, it is not possible to complete our review of Bill C-6 and Supplementary Estimates (B). So here is the government insisting we hurry along and approve the appropriation Bill C-6 so they can spend more money, yet they are refusing to provide the information we need to do our jobs as parliamentarians.

The Department of Crown-Indigenous Relations and Northern Affairs, and the Department of Indigenous Services Canada were created in 2019. Taking into account the proposed spending in Supplementary Estimates (B), the spending for these two departments so far this year will be about $28 billion. According to the Parliamentary Budget Officer in his report on Supplementary Estimates (B), Indigenous-related spending in 2017-18 was just under $14 billion, so the budget has increased 93% over the past five years; almost double.

Committee members were interested in knowing where the money is actually going. To which First Nations? Is it being fairly distributed? And are the desired results being achieved? The public accounts for last year and the departmental results reports would have assisted us in answering these questions, if the government had released those documents.

Given the significant increase in expenditures in those two departments over the past five years, committee members were also interested in the oversight functions being provided by Treasury Board. Officials explained their oversight function, how they review spending proposals, and emphasized that departments must disclose the performance indicators they will use to measure the success of each program. But what is the point of the performance indicators if they are not provided in a timely manner to parliamentarians?

Of particular interest to the committee was the $624 million being requested by the Department of Crown-Indigenous Relations and Northern Affairs for the Specific Claims Settlement Fund and the Indian Residential Day Scholars litigation.

Honourable senators may recall that Supplementary Estimates (A) in June provided $610 million for the Federal Indian Day School settlement agreement, $256 million for the Sixties Scoop settlement and $1.2 billion for the out-of-court settlements.

When I spoke in this chamber on Supplementary Estimates (A), I indicated that departmental officials could not provide the Finance Committee with any details of the $1.2 billion requested for out-of-court settlements, citing confidentiality of discussions during the litigation process. That $1.2 billion was being requested to ensure funding was available should there be settlements.

The $624 million is being requested in Bill C-6 so that money is available if claims are finalized. Officials also indicated that these claims have been set up as a contingent liability in the 2021 public accounts, which we didn’t have access to.

Since government was withholding the 2021 public accounts, it was not possible to complete a review of the $624 million and the contingent liability. This is just one example which indicates that the 2021 public accounts and the 2021 departmental performance reports are necessary to complete our review of Bill C-6 and Supplementary Estimates (B).

Included in Supplementary Estimates (B) is a statutory payment of $2.35 billion for the Canada Enterprise Emergency Funding Corporation. Given that Supplementary Estimates (B) discloses expenditures of $16 billion in total, the $2.35 billion is quite significant.

The funding for the Canada Enterprise Emergency Funding Corporation is statutory. That means it has already been approved by the Financial Administration Act and, therefore, funding is not being requested in Bill C-6. However, the funding is disclosed in Supplementary Estimates (B) for information purposes.

The Canada Enterprise Emergency Funding Corporation was created in 2020 as a wholly owned subsidiary of the Canada Development Corporation. In essence, it is a Crown corporation, and it was created by government to provide a credit support program for large Canadian companies in response to the COVID-19 pandemic. That would have been companies like Air Canada. The government, through the purchase of shares, provides the corporation with funding so it can implement the credit support program. So far, the government has purchased $2.89 billion in shares of the corporation, and the corporation uses that money to administer the program and provide it to large employers.

Earlier this year, Finance officials told us that the corporation has appointed its auditors; it has not used its discretion to appoint an observer on the board of directors of any borrower; and information on standardized terms of the program are made public on the corporation’s website. However, detailed terms and covenants on the individual loan agreements are commercially confidential and therefore they are not publicly available.

The corporation has also provided substantial information on its website, including quarterly financial statements and details of the financial assistance provided to Canadian companies. Government contributions, as of September 30, 2021, were $2.89 billion and represent preference shares in the Crown corporation issued to the Government of Canada. Loans to borrowers at the end of September totalled $2.581 billion. Information on financial assistance to individual companies is disclosed on the corporation’s website.

Companies that receive financing through this program must agree to sustain their domestic operations, make commercial efforts to minimize the loss of jobs and demonstrate a clear plan to return to financial stability. They must also agree to place restrictions on executive compensation. That issue was raised at the Finance Committee; they have to agree to place restrictions on executive compensation, on dividends and on share buy-backs. They must also publish annual climate-related disclosure reports indicating how their future operations will support environmental sustainability and Canada’s climate goals.

The corporation has disclosed — and this is something that is very important for the Finance Committee — that there is a substantial amount of credit risk associated with these loans based on the terms and eligibility criteria of the program. Currently, the $2.89 billion advanced by the government would be recorded as an investment or loan and would therefore be considered non-budgetary. However, if there are losses, these losses will increase the government’s deficit. Departmental officials were unable to tell the committee the deadline for applications, when the program would end and what the “exit strategy” is, not only for the program but for the corporation.

Honourable senators, the Department of National Defence is requesting $644 billion in Bill C-6, of which $327 million is for pay increases for certain categories of employees within the department. Senator Gagné mentioned that in her speech. These pay increases are in accordance with the National Defence Act. There is a specific section within the act that gives Treasury Board the authority to establish the rates and conditions of pay for certain categories of members of the Canadian Armed Forces. These economic increases are aligned with salary improvements reached through the collective bargaining process for employees of the federal public service and cover three fiscal years, from 2018 to 2021.

The department is also requesting $250 million for the Heyder Beattie Final Settlement Agreement. These were the class action lawsuits — we are all familiar with them — that were initiated in 2016 and 2017, and sought damages related to gender-based discrimination, sexual assault and sexual harassment. Funding will be used to fulfill obligations and payments under the final agreement including the assessment of claims, payments to claimants, administration and case management. There is also $2.5 million being requested to pay for IT and information management equipment related to the settlement agreement.

There are also $64 million being requested by the department for NATO programs. Senators were interested in Canada’s commitment to NATO and raised questions regarding the age of our aircraft, lack of protection of the North and the lack of ships within our navy. Senators were also interested in the operation and maintenance of the North Warning System and whether any of the $64 million will be used to upgrade the North Warning System and/or assist Canada’s presence in the Arctic, given the increased presence of other countries.

Officials referred to the $252 million included in the budget to support NORAD modernization and sustain existing continental and Arctic defence capabilities over the next five years. Of the $252 million included in the budget — it’s for a five-year period — $45 million has been earmarked for this fiscal year but has yet to be requested in an appropriation bill. So here we are; it’s near the end of December, I haven’t seen where that $45 million has shown up in an appropriation bill and I don’t think it is statutory.

The Main Estimates of the Department of National Defence also provide $5.7 billion for capital projects. In previous Finance Committee meetings, obtaining information on capital projects has been very difficult.

Budget 2021 committed $267 million over three years to modernize the department’s information systems, specifically the systems needed to manage its assets, finances and human resources. These improvements will ensure the Canadian Armed Forces will have access to the equipment they need, when and where it is required. Of the $267 million committed over the next five years, $89 million has been committed for this year. Again, we’re almost at the end of December, but I don’t see where the department has yet requested that $89 million.

That concludes my remarks for second reading of Bill C-6. I would like to thank our chair Senator Mockler and our deputy chair Senator Forest for their assistance in arranging the meetings this past week. I did find it quite a challenge to get all the meetings in, in one week, especially since the government didn’t provide all the information that we needed.

I would also thank all members of the Finance Committee for their excellent questions during our meetings and also to all the staff who assisted in organizing and making sure that our meetings ran as smoothly as possible. Thank you, honourable senators.

Senator Marshall: Yes, of course.

Senator Marshall: Yes. Thank you very much, Senator Galvez, for that question. My personal preference would be to reinstate the estimates reform project. When Minister Brison was there, for two consecutive years he had tried two different things. While they weren’t perfect, they were helpful. I did find that, while we are struggling to try to make sense of the estimates, when we had those two years where we were trying something new, it was really motivational. I found that Minister Brison was very receptive; he appeared many times before our Finance Committee and he was really engaged. That would be number one.

I would like to sneak in item number two. I think the government should put a bigger effort into providing financial information. Sometimes, I get the feeling they are withholding it for a purpose, like they don’t want to give us the information. So we are not able to track it. If they don’t give us the information, all I can say is that I don’t have the information. If they gave me the public accounts I could probably come up with 500 questions, but right now all I can say is, “where are the public accounts?” We do have them, but our review is done. We are going to discuss our report tomorrow. So it’s not a good situation.

Senator Galvez, I’m used to working with numbers, so the government documents don’t intimidate me. But as I said to the President of the Treasury Board the other day, when I review Supplementary Estimates (B), I almost need a calculator, pen and paper as I’m trying to go back and forth because the government won’t provide the information.

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