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3.0 Treasury Board Policy on Transfer Payments
In order to facilitate understanding and interpretation of the findings of this report, the key requirements of the Treasury Board Policy on Transfer Payments are stated below.
“Transfer payments are transfers of money, goods, services or assets made from an appropriation to individuals, organizations or other levels of government, without the federal government directly receiving goods or services in return. Payments that are made in exchange for goods or services are contracts and are subject to the Government Contract Regulations, Trade Agreements and the Contracting Policy.”1 This section of the Policy makes it clear that while the objectives of the government are expected to be furthered through transfer payments, the government itself cannot receive a direct benefit in return. There are no reports to the government of a consulting nature nor does the government receive another service or good. This does not mean that the recipient of a transfer payment does not receive a direct benefit. The key difference between a transfer payment and a contract is who receives the good or service. The government indeed, expects recipients of transfer payments to directly benefit in some way.
The three types of transfer payments are grants, contributions and other transfer payments. During the period covered by the audit almost all of WD activity was the issuing of contributions. WD had one grant ($27 million to the Friends of the Canadian Museum for Human Rights – see Appendix A) and no other transfer payments. The definitions for each type of transfer payment are listed below.
Contribution (contribution) - is a conditional transfer payment to an individual or organization for a specified purpose pursuant to a contribution agreement that is subject to being accounted for and audited. Contributions would also include Alternate Funding Arrangements and Flexible Transfer Payments, which represent types of contributions that were developed for the Department of Indian and Northern Affairs to meet their unique program objectives.
Grant (subvention) - is a transfer payment made to an individual or organization, which is not subject to being accounted for or audited but for which eligibility and entitlement may be verified or for which the recipient may need to meet pre-conditions.
Other transfer payments (autres transferts) - are transfer payments based on legislation or an arrangement which normally includes a formula or schedule as one element used to determine the expenditure amount; however, once payments are made, the recipient may redistribute the funds among the several approved categories of expenditure in the arrangement. Examples of other transfer payments are transfers to other levels of government such as Equalization Payments as well as Canada Health and Social Transfer Payments.”2
The Policy further clarifies that “All transfer payments are subject to public scrutiny and must be managed in a manner that is open and transparent to the public, and with due regard to economy, efficiency and effectiveness. Basic principles of parliamentary control, authority and accountability establish the boundaries within which decisions are made on the use and management of transfer payments.”3
“It is government policy:
- to make transfer payments to further approved federal government policy and program objectives;
- to manage transfer payments in a manner sensitive to risks, complexity, accountability for results and economical use of resources; and
- to require repayment of contributions made to a business which is intended to allow it to generate profits or increase the value of the business, unless otherwise approved by Treasury Board.”4
1Policy on Transfer Payments, Treasury Board of Canada Secretariat, June 1, 2000, Section 2 Preface
2Policy on Transfer Payments, Treasury Board of Canada Secretariat, June 1, 2000, Appendix A
3Policy on Transfer Payments, Treasury Board of Canada Secretariat, June 1, 2000, Section 2, Preface
4Policy on Transfer Payments, Treasury Board of Canada Secretariat, June 1, 2000, Section 5, Policy Statement