CONTENTS
Tuesday 10 May 1994
Organization
STANDING COMMITTEE ON ESTIMATES
*Chair / Président: Jackson, Cameron (Burlington South/-Sud PC)
*Vice-Chair / Vice-Président: Arnott, Ted (Wellington PC)
*Abel, Donald (Wentworth North/-Nord ND)
Carr, Gary (Oakville South/-Sud PC)
*Duignan, Noel (Halton North/-Nord ND)
Elston, Murray J. (Bruce L)
*Fletcher, Derek (Guelph ND)
*Hayes, Pat (Essex-Kent ND)
*Lessard, Wayne (Windsor-Walkerville ND)
Mahoney, Steven W. (Mississauga West/-Ouest L)
*Ramsay, David (Timiskaming L)
*Wiseman, Jim (Durham West/-Ouest ND)
*In attendance / présents
Clerk / Greffière: Grannum, Tonia
Staff / Personnel: McLellan, Ray, research officer, Legislative Research Service
The committee met at 1528 in committee room 1.
ORGANIZATION
The Chair (Mr Cameron Jackson): I call to order the standing committee on estimates and welcome the committee members to our mandate to examine the estimates for the 1994-95 fiscal year of the government of Ontario. Our clerk has prepared a brief organizational agenda, but our first order of business is the need to find a new nominee for the government side to the subcommittee, since the House leaders have informed the House of a change off the committee.
Mr Noel Duignan (Halton North): I move Wayne Lessard as our member of the subcommittee.
The Chair: Any other nominees? Seeing none, all those in favour? Opposed, if any? That's carried unanimously.
The other items you may wish to add to your agenda are a brief report from Ray McLellan, our researcher, attached and more devoted to our committee, and also a letter which I have sent to the chairs of the standing committee on finance and economic affairs and the standing committee on public accounts around certain commonalities between our three committees with respect to financial matters of the House.
The third item I hope we are able to dispense with today is the selections for the estimates for consideration. I'm led to believe by the subcommittee representatives of each of the caucuses that they were able to come prepared to make those selections today. That will be very helpful to the government both in preparing its estimates books for each ministry but also those that are chosen first.
Is there general agreement that we proceed with those three items? Are there any additional items that any member wishes to raise in this meeting? No.
Can we proceed with the selection process first? Are you comfortable with that? Then, in accordance with the standing orders, each caucus, in rotation, can call up to two ministries, with a total of 15 hours to be divided as per their suggestion. We will proceed first with the official opposition, then with the third party and then the governing party, in accordance with the standing rules. Is that understood?
Mr Wayne Lessard (Windsor-Walkerville): Usually we were dividing up 15 hours per choice. Did you mention that, 15 hours? You said the number of hours at their request. I just wanted to clarify that.
The Chair: I think I suggested 15 hours and how that's divided, but if you present two ministries, you may wish to do 10 and five hours or whatever. I'm simply saying that within that 15-hour maximum, the Chair would seek the guidance of the proposer of the selected ministries to assist us by giving us the amount of time. Is that agreeable? Agreed.
I will begin with the Liberal caucus.
Mr David Ramsay (Timiskaming): Our first choice would be Solicitor General and Corrections.
The Chair: And your second choice?
Mr Ramsay: Our second choice would be Health.
The Chair: How would you propose to divide your time, or do you want to think about that for a moment?
Mr Ramsay: Yes, I'll think about it, thanks.
The Chair: Very good.
Mr Ted Arnott (Wellington): The Conservative caucus would choose as a first pick the Ministry of Transportation and as a second pick the Ministry of Community and Social Services. The suggestion of our caucus is that six hours be allocated to the Ministry of Transportation and nine hours to the Ministry of Community and Social Services.
The Chair: Thank you very much.
Mr Lessard: The Ministry of Northern Development and Mines for seven and a half hours and Management Board for seven and a half.
The Chair: No comment.
Mr Ramsay, I'd like to recognize you for the second round. Do you have your selections?
Mr Ramsay: Yes. We would like to select Agriculture and Food, and Housing.
Mr Arnott: Second-round choices for the Conservative caucus would be the Ministry of the Environment and the Ministry of Energy, splitting the time.
Mr Lessard: They're combined ministries; it's the Ministry of Environment and Energy.
Mr Derek Fletcher (Guelph): It's one ministry now.
Mr Lessard: The estimates are going to be combined. If you want to do it for 15 hours --
Mr Arnott: That's true, yes.
The Chair: Do you want to think about another selection?
Mr Arnott: Yes, I do, Mr Chairman. Culture, Tourism and Recreation would be our second choice.
The Chair: Thank you. How much time?
Mr Arnott: Splitting the time between the two, seven and a half hours.
The Chair: And Mr Lessard?
Mr Lessard: The Ministry of Economic Development and Trade and the Ministry of Natural Resources, seven and a half hours each.
The Chair: Could I return to Mr Ramsay? Can you give us a sense of your allocation on the Solicitor General and Corrections and Health?
Mr Ramsay: Six for the Solicitor General, nine for Health; six for Agriculture, Food and Rural Affairs, nine for Housing.
The Chair: I will read the motion before the committee.
Mr Jim Wiseman (Durham West): That's the Solicitor General and Corrections together?
The Chair: Yes.
Mr Wiseman: Same minister, but different --
The Chair: Well, are they separate ministries? What's the ruling?
Mr Wiseman: I think they're separate ministries. Could we check that?
The Chair: Are they separate estimates? It's a combined ministry, I'm advised, so they'll be treated as one. That's fine.
If I may, I'll read the motion moved by Mr Ramsay, seconded by Mr Arnott:
"That the following estimates in order be presented to the House for approval for the 1994-95 estimates consideration:
"Solicitor General and Correctional Services ministry, six hours; the Ministry of Health, nine hours; the Ministry of Transportation, six hours; the Ministry of Community and Social Services, nine hours; the Ministry of Northern Development and Mines, seven and a half hours; Management Board, seven and a half hours; the Ministry of Agriculture, Food and Rural Affairs, six hours; the Ministry of Housing, nine hours; the Ministry of Environment and Energy, seven and a half hours; the Ministry of Culture, Tourism and Recreation, seven and a half hours; the Ministry of Economic Development and Trade, seven and a half hours; and the Ministry of Natural Resources, seven and a half hours."
All those in favour? Opposed, if any? That's carried.
We have two other items that we could perhaps deal with today by way of introduction, and then not necessarily call upon us to have a meeting next week unless the committee sees fit to do so.
Just by way of information, I should let you know that the Treasurer has five sessional days to table the estimates, and we have 10 days after that period of time in which to begin our estimates. Technically the first day on which we can begin our estimates is May 30, in case you want to make a note of that.
Since the committee meets on Tuesdays and Wednesdays, May 31 and June 1 will be the beginning of the estimates of the Solicitor General and Corrections ministry. Once this has passed in the House and we've reported to the House on Thursday, then we will notify the ministries so that they know when their ministry will come up. With your permission, we'll schedule our estimates to begin on May 31.
Perhaps I could introduce and welcome Ray McLellan, who's a researcher attached to our committee, who has developed a report on estimates review procedures and expenditure accountability. I apologize if this hasn't gotten into your hands a little earlier, but we had a subcommittee meeting last week to inform the caucuses that we were obtaining this information for purposes of discussion within the committee. I'd like to hand it over to Ray unless there's an initial question. He has a brief couple of words about the report.
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Mr Ray McLellan: I would just deal with the report that's entitled Overview of Estimates Reporting in Ontario. What I was asked to do in this report is update an earlier report that had been prepared by legislative research, and this would be going back a year ago now, actually to 1991.
A report had been prepared looking at the estimates process and concerns that had been voiced between 1979 and 1989, until the committee was established. The Provincial Auditor and a number of provincial committees during that 10-year period had looked at the estimates process. The overwhelming recommendation was that an estimates committee be established, and of course that has been done.
This document is really more for information purposes and hopefully it'll help us, as we look at the estimates process, understand exactly how it works from the mechanical background; in other words, how the expenditure estimates come to be, the role of the Supply Act etc.
The "Estimates Planning and Reporting Requirements" describe the annual planning procedures that are followed by the government, the role of treasury board with respect to instructing ministries to prepare the estimates, and, going on to page 3 of the report, I look at the role of the policy and priorities board, the treasury board's role, the Management Board's role, how the government repackages estimates from year to year.
Something that I was particularly interested in is the treasury board review process, at the bottom of page 3 and the top of page 4, and the instructions that the ministries receive through this yellow document which has been around for a couple of years. It's entitled General Guidelines for the 1994-95 Estimates in this case, so this is the most current document that the ministries are expected to comply with.
The Chair: If I may, has everybody got this package? You have that? Good.
Mr McLellan: Over the years the committee has discussed this document and looked at it and made recommendations for changing and improving it. Generally the comments have dealt with general issues, not specifically the contents. They've dealt with the production costs of the estimates, the visual presentation of the documentation in this general guideline, and also the time frame for submitting the estimates and briefing books.
Of interest in this particular document is the reference on page 9 to the sections "Major Capital Projects" and "Financial Analysis of Activity and Subactivity." These are the two critical changes.
At the top of the page, under "Major Capital Projects," we deal with the crown corporations, the Ontario Financing Authority and the treatment of loans. The clerk can hand out a page on background with respect to the Ontario Financing Authority and that'll help us understand how the process works, but I'll just read this so we're clear that this is new information and will change the procedure somewhat as we look at the estimates this year. It says as follows:
"Non-budgetary capital will no longer appear in the printed estimates. Since these funds will be advanced as loans from the Ontario Financing Authority, it is not appropriate to show it as part of your estimates. However, a note should explain moving capital expenditure to the crown corporations as loan-based financing."
The handout going around right now explains exactly how the Ontario Financing Authority operates. I go on to read here at the top of the page:
"Please note that for those ministries where non-budgetary, loan-based capital financing has been approved in place of capital expenditures, the comparable prior year's estimates in interim actuals amounts for the 1992-93 actual should not be restated as non-budgetary." That's the first change.
Secondly, going down to the section, "Financial Analysis of Activity/Subactivity," the second paragraph reads, "Ministries delivering Jobs Ontario programs should clearly separate and label these entities. These programs are Jobs Ontario Capital, Jobs Ontario Training (including Jobs Ontario Training Child Care), Jobs Ontario Summer Employment (formerly youth), Jobs Ontario Homes and Jobs Ontario Community Action." Those are the only changes we're dealing with with respect to the general guidelines for the estimates we're going to consider this year.
The rest of this background report goes on, as I say, to discuss the statutory framework with respect to the Supply Act, the specific legislation that we're dealing with here, and the relevant statutes are listed on page 5. I won't bore you by going through the details of those. The Treasury Board Act, the Executive Council Act, the administration act, these deal with the estimates process and where the figures come from.
The Chair: Ray, can I just interrupt? I'm not sure I have the document you're referencing.
Mr McLellan: This is the one entitled Overview of Estimates Reporting in Ontario.
The Chair: Okay. That's not the one we've circulated. You don't have an extra copy?
Mr McLellan: I only have that one copy.
The Chair: Okay. I apologize to the committee because we've been referencing a document that isn't before you. We will recirculate that document, and with that understanding, Ray, continue.
Mr McLellan: This document was prepared, going back a couple of weeks ago and submitted, but I'm not sure exactly what did happen with it.
The Chair: It wasn't circulated to the committee, I don't believe, but we'll correct that.
Mr McLellan: This document runs through the statutory framework. We look at the general guidelines for this year. Basically, there isn't much more in that document other than just setting the framework. I discussed this issue with the Chair, and he had said to me that we should follow up on the 1991 document and give the committee some kind of context as to where the estimates come from and the fact that ministries are expected to comply with this particular document, and that if there are any changes from last year, we should note and highlight those, and I've done that.
As I say, I think these are the two critical areas with respect to the crown corporations and those are areas we should have a look at when we look at the estimates this year. This document deals with that background material and little more than that, but at least it provides us with a framework for the estimates review.
Are there any questions on that? It's unfortunate that you haven't had it to look at.
Mr Duignan: Maybe when we get a look at it, we'll get back to you.
Mr McLellan: Okay. That deals with the general guidelines issue. There are a couple of other points, and I'll raise them quickly.
Another point the Chair had asked me to look at -- and hopefully you'll have this memo, dealing with the estimates in selected jurisdictions across the country.
The Chair: No, they don't have that. What they've been circulated is this one here, Estimates Review Procedures and Expenditure Accountability, and this memorandum.
Interjection.
The Chair: No, that has not been circulated as yet.
Mr McLellan: We're not having a great deal of success on this. The last one of the three is the one before you, entitled Estimates Review Procedures and Expenditure Accountability. In this document, what I've attempted to do is to provide a bit more background with respect to the Supply Act.
As I've said here: "Spending authority, other than for payments authorized by a specific statute, is granted by the Legislature to the government by the process of `supply' as governed by the House standing orders and parliamentary tradition. Passage of the Supply Act constitutes the statutory authorization by the Legislature of the government's spending program for the fiscal year."
On the bottom of page 1 and the top of page 2 I've outlined exactly the way in which this occurs or happens. This process applies only to the voted appropriations, which comprise about 90% of the estimates. The remaining 10% are dealt with through statutory appropriations; for example, as I referred to earlier in the other report, the Executive Council Act, the Financial Administration Act. So the majority of the estimates are dealt with through the voted appropriations, as I think most of us are aware.
Prior to the actual passage of the Supply Act, usually in the autumn of the year, government spending proceeds on the basis of the motion for interim supply.
In addition to the Supply Act, the other sources for alternative funding mechanisms and sources are through special warrants. Generally, special warrants have been used very infrequently; I think over the last number of years just a couple of times. Often they'll deal with, as I've noted here, natural disasters.
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On the top of page 3: We also have what we call treasury board orders. They're not voted in the House but are reported in the Ontario Gazette.
Thirdly, statutory appropriations: Funding is created by a specific statute, and we've referred to some of the statutes. Again, however, these increases require treasury board approval.
Mr Fletcher: The special warrants come from Finance?
Mr McLellan: It's under the auspices of the Treasury Board Act. I spoke with Finance about it the other day. As I say, they deal with natural disasters, for example, or the farming community and issues such as that.
Mr Fletcher: The Hagersville fire would fall under that?
Mr McLellan: I'm not sure about that, but as I say, they're used infrequently.
Just to provide some context as well, as we look at the accountability process, and that's part of our job here, Management Board has two volumes called the Directives and the Guidelines, and in those documents Management Board provides very clear directives to managers within ministries as to how they are to conduct their business with respect to estimates.
I went back and had a look at the Guidelines and the Directives and I say here, "Management Board of Cabinet's directive on expenditure management provides an accountability framework for public funds. The purpose of the directives is as follows," and I listed the four main points with respect to the allocation and control of funds and expenditures monitored and controlled within specific authorized guidelines. So there is, as I say, a very definite framework that managers are expected to comply with.
"The directive provides mandatory requirements with respect to maintaining expenditure levels as provided by Management Board and the Legislature," and the necessary approvals to spend above the authorized limits have to be addressed, obviously, by Management Board. "Management Board approval is required for the annual estimates, expenditure increases/decreases, Management Board orders" -- in this case treasury board orders -- "supplementary estimates etc."
The movement of funds back and forth within ministries is very closely guarded and reported. In the expenditure manager's guide from Management Board, they go into a great deal of detail as to how these are monitored. For example, there are ministry reports specifically on the results. There are the ministry annual reports that deal with issues such as this. There are the public accounts and obviously the Provincial Auditor's report to the public accounts committee. So there is a very rigid mechanism to monitor and account for these funds.
Then on page 3, I note some comments on the estimates review process. I referred earlier to the various legislative committees that have looked at the issue of accountability for the estimates process. I make reference to those committees and also to concerns of the Provincial Auditor in his 1987 and 1988 reports. I think this ties in to an issue that has been raised by the Chair. Maybe I can refer to the letter that I think has been tabled. That letter builds on some comments made by the Provincial Auditor back in the 1987 and 1988 annual reports.
At that time, issues were raised with respect to the estimates reporting process. Specifically, members at the time had raised concerns about the fact that spending takes place before the actual vote on the Supply Act occurs. In addition to that, members had raised concerns with respect to the cursory review of the estimates. So back five and six years ago, a number of concerns had been raised with respect to the estimates.
At the time, the Provincial Auditor made the following recommendation to revise and strengthen the accountability loop for the estimates process, and I think this ties into this letter from the Chair of April 7.
The Provincial Auditor at the time made the following recommendation to revise and strengthen the accountability process in the estimates review:
The estimates committee should "coordinate its work with that of the standing committee on public accounts and the Office of the Provincial Auditor. For example, in a given fiscal year, the proposed expenditures of certain ministries would be reviewed and approved by the newly formed committee." That is this committee. "Later, the actual expenditures of the same ministries would be audited by the Provincial Auditor and commented on in the auditor's annual report to the Legislature. These comments would be subsequently examined by the standing committee on public accounts."
I've spent a number of years at the public accounts committee and we have not specifically addressed these issues. That committee is primarily concerned with reviewing the specific audits that come out of the auditor's annual report at the end of each year.
Mr Fletcher: Is this saying that these committees should form a new committee? Is that what I'm hearing?
Mr McLellan: At the time, I was trying to tie my comments into some of the points that have been raised by the Chair of the estimates committee, and I wanted to give some background on the thinking five and six years ago as to what they thought should be done to close the accountability loop.
If this committee is going to be tied with other committees, for example, the public accounts committee or the finance and economic affairs committee, I just wanted to give you some precedent of some of the earlier thinking on this issue.
Mr Arnott: Mr Chairman, have you received a response from either of the individuals?
The Chair: Not as yet.
Mr Arnott: They would have to discuss it with the committees involved.
The Chair: I can say that they are aware of the issues I raised in my letter, because I was present as a member of the public accounts committee when it was discussed with the auditor in the room. I was a member of the economic affairs committee when it was briefly mentioned. So the other two committees are talking about it.
I simply took the initiative to write them. Ray has put in context in his report the genesis of it. We're not proposing an additional committee. We're simply saying that the three committees may not wish to continue to act in isolation of each other, given that the Provincial Auditor and maybe critics outside of this building, the public at large, may want to start asking some questions about how our accountability loop works.
I thought that it best be advised that the committee at least examine some of this information and not have it brought to our attention through the route of an auditor's report or another committee telling us whether they think we're doing a good job or not, but that we should reflect upon that as a committee.
Mr Fletcher: If we're looking at the committees coordinating and trying to get rid of the duplication, I read your letter and I think that's a good idea. I can understand that. But if we're thinking of setting up another committee to oversee, I don't think I can go along with that.
The Chair: No, it's not even being remotely suggested or implied.
Mr Fletcher: But we'll discuss that at a later date.
The Chair: I think it's fair that we, as a committee, for example, should reflect on the fact that there's no linkage with the other two committees, and yet in the eyes of the public we're responsible for examining expenditures. Surely there's support for us to link periodically so that we can dialogue. To have the three committees come together to discuss matters of mutual concern I don't think would be out of order.
Mr Fletcher: No, I have absolutely no problem with dialogue and working together. That's a good idea. That should be happening at all levels.
The Chair: Secondly, Mr Fletcher, there are periods of time when the committees are more active than others, but I think it's fair for me to say that we have a very proactive auditor in this province now -- not in any way to diminish what many felt was a superb effort by Douglas Archer. He, with his experience from across Canada, is expressing some concerns about strengthening the accountability loop, as Ray has referenced it.
I was nervous that so many other people were talking about our committee but that we weren't. I just wanted to stimulate the dialogue so that if we're asked, we could say: "Oh yes, we're looking at that. Thank you very much."
Mr Fletcher: I think it's a very good idea every now and then to take a look at your committee. I think it should be up for discussion.
Mr Pat Hayes (Essex-Kent): I would agree.
The Chair: You mentioned accountability and Pat says, "Yes, we're looking at it, no problem."
Mr Ramsay: Have you considered maybe asking the auditor to come to this committee to get his suggestions about how we could close that accountability loop, as you describe it?
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The Chair: Mr Ramsay has suggested that perhaps we as a committee might consider inviting the auditor, and I would agree with that. I believe it would be inappropriate for me to meet privately with the auditor. I don't think that's my role as the Chair of this committee, and out of respect for his position. However, he would be most willing to have an official invitation from an all-party committee of the House. He would be more than willing to attend. So far I've resisted anything other than that.
Mr Ramsay: Would you take my suggestion as a proposal, that we do that?
The Chair: In the form of a motion, we can do just about anything. I would suspect, however, that we would want to further test the waters. Each of the committees in question is chaired by a member of a different caucus, so perhaps we should start with making some contact with the other two committees, and say that the auditor might be very pleased to participate in a larger forum where a lot of issues can be discussed and time might be devoted to do that, as opposed to his going from one committee to the other. That's just a suggestion. I know he would be very pleased to respond to very direct questions in that context of the three committees meeting, just as an idea.
Mr Duignan: Rather than the auditor come to this particular committee and answer questions, if we're talking with the other two committees, I suggest that maybe it would be appropriate to have a joint meeting of all three committees and have the auditor in at that point and direct his comments to all three committees, and in turn have time for questioning, rather than going back and forth between three different committees. At least that way everybody has the same story at the same time.
Mr Fletcher: On the same lines, yes, I'd much rather thrash it out here with us as a committee, and let each other committee do the same thing, and meet as a committee with the auditor then. Then we can thrash it out again. I think we should get together and make sure that we're working together and know where we want to go as a committee. We owe that to the other committees also before we start getting the auditor involved. I concur with what was said earlier. I think that's a good idea.
The Chair: Do we wish to convene a subsequent meeting where I will get the additional information that Ray has developed but we didn't have here for you today?
Clerk of the Committee (Ms Tonia Grannum): I'm getting it.
The Chair: It's on its way, but in terms of giving you an opportunity to absorb it and then come back to a subsequent brief meeting to look at those issues, that might be one suggestion. I might also entertain a motion for us to notify the other two committees again that, "We haven't heard from you as yet, but we're most anxious to undertake a dialogue," or we can just wait till we hear back from them. Any comments on any of that?
Mr Arnott: I agree, and I would so move, that you be instructed to write an additional subsequent letter to the two chairmen asking them for their consideration of our initial question.
The Chair: I'm not avoiding calling that a motion, but to be helpful, could it not include sharing with them the information that Ray has researched? Ray has held the hat on all three of these committees from time to time, so perhaps sharing this information that he's researched for our committee with the other committees is part of the reason we're writing them. If that's in order and that's a motion, comments on the motion?
Mr Duignan: I think that's a good idea. We need to share information with the other committees, and rather than have another meeting to discuss something, I would rather wait first to hear back from the other committees to find out what their thinking is and what their suggestion is and then sit down and have a look at that and have a full discussion around what all three committees think about it, rather than just thrashing it out ourselves.
Mr Fletcher: Can we just have a consensus --
The Chair: I have a motion on the floor, so I have to deal with it, and it is in order. It's simply to write a letter showing this committee has on this date discussed the issue contained in the Chair's letter of April 7, that we wish to share with the committees in question additional information and that we await any form of response the committee deems appropriate. We'll leave it at that. If at the next meeting you want to invite them to a meeting, we can do that if we want to, but at this point, we'll just share the information.
Does everybody understand the motion? All those in favour? Opposed, if any? Carried.
Any other items for the committee? Ray made one reference to a further report, which was copies of estimates processes in selected provinces. This has to do with the reporting of the estimates and any variances between the provinces. If you're interested in that, we'll circulate that to the members. And we'll circulate the other report; I apologize; that was just a communication breakdown at my end.
Is there any other new business other than should we meet again? Technically, we're not ready to go until May 31. Do you want to meet again -- Tuesdays and Wednesdays are our days and the House isn't sitting the week of May 23 -- next week on the 17th or the 18th?
Mr Fletcher: Let's meet next Tuesday.
Interjection: Why?
The Chair: He said, "Why?"
Mr Arnott: We'll leave it in your hands to call a meeting should we receive any further developments.
Mr Duignan: We'll leave it up to the call of the Chair.
The Chair: Okay. This meeting stands adjourned. It will be reconvened at the call of the Chair.
The committee adjourned at 1607.