Public Accounts Committee on March 8th, 2011

[Earl Dreeshen, Conservative, Red Deer, AB]

So when we talk about the cost benefit, then, that is an example. We recognize that there is a deficit in the EI fund, if we wish to speak to that, but these were dollars that were being spent that were able to keep people working and in their communities so they were able to maintain their jobs. That's the way you see it?

[Benoît Robidoux]

I would think that this program was one good example of a fairly effective program in terms of cost benefit. It would be a good example of that. The impact on the account has been fairly minimal, and the benefit for our workers has been fairly large, I believe. I suppose I would say that it's a program that has been more popular than we thought, and it did function very well through the recession.

[Earl Dreeshen, Conservative, Red Deer, AB]

Okay, thank you.

You had also talked about reduction of taxes, and I believe it's in volume I, page 1.4, that you spoke of tax savings. Could you perhaps go through those personal tax savings to Canadians? What would that be for the average Canadian?

[Benoît Robidoux]

I couldn't tell you for the average. It was again a personal income tax reduction that was announced in the 2009 budget and it was announced as permanent, so it's a permanent reduction.

We explained in the first report that in terms of stimulating the economy, a permanent reduction in taxes, when you can afford it—which was the case in Canada at that time—is way more effective than a temporary reduction; temporary reductions tend to be saved by people because they know they're only temporary.

So those were permanent, broad-based tax cuts to all Canadians that did support consumption spending through the recovery, for sure.

[Earl Dreeshen, Conservative, Red Deer, AB]

Could someone comment, then, on the transitional assistance to the provinces that came in the form of transfer payments, and how they might have inflated the projected deficit?

[Benoît Robidoux]

On the transitional payment to provinces, as you know, we had agreements at the time of the 2010 budget, for sure, and before with B.C. and Ontario to harmonize their sales tax. And we recorded the payments as expected, based on the agreements.

At the time of the financial statement, we had discussions with the CG, discussions with the AG, and by then we were advised that all the criteria needed to implement the HST in these provinces were expected. As a result, we had to provide all the payments in 2009-10, which led to a higher deficit than expected in that year.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you.

My last comment is that the first quarter of 2010 showed a real GDP growth of 5.8%, which has been the strongest in the last 10 years. I am just wondering if there are any comments on what might have contributed to this strong growth.

[Benoît Robidoux]

I'm sorry, what might....?

[Earl Dreeshen, Conservative, Red Deer, AB]

What might have contributed to the growth in GDP in this last quarter.

[Benoît Robidoux]

Well, this is kind of typical in recovery, to have a rebound. In Canada it was a stronger rebound than elsewhere.

We have again in our report looked at the impact of the action plan. I do believe in that quarter the impact of the action plan was fairly important. I don't have the number with me, but I think we have explained half of that number. But I would refer you to the report we put in Budget 2010, in the annex, which looks at that. But clearly the action plan was instrumental in supporting that growth.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Robidoux.

I'm going to give Monsieur Nadeau two and a half minutes, but I understand he wants to share his time with Madame Faille.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you, Mr. Chair. The whole matter of employment agencies bothers me a bit. I would like to know what you think.

In the public service, people have casual contracts. Unfortunately, they can remain casual employees for a long time. Furthermore, based on what we know about them, employment agencies make a lot of money through federal funds. In my humble opinion, it would be better to have faithful employees in the organization than to do extensive business with employment agencies. However, I'm not saying that people don't have a need for these agencies.

Do you notice that the government tends to spend more money by using employment agencies, by hiring casual employees, rather than people who would eventually become indeterminate employees?

[The Chair, Liberal, Joe Volpe]

Who are you asking?

[Richard Nadeau, Bloc, Gatineau, QC]

My question is for anyone who can answer it.

[John Wiersema]

Perhaps I'll start on this, Mr. Chairman, and Mr. Ralston can add.

The issue of the use of temporary help agencies by the government has come up a couple of times in today's discussion. It has also come up in other discussions that the office has had with other members and members in the other place. We have received a number of requests to consider doing a performance audit on the government's use of temporary help agencies. I know the Auditor General is considering doing that audit.

Obviously, it would be an audit that will be delivered by the next Auditor General. It is something that's on our radar screen, and we are looking at the possibility of doing a performance audit in this area.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you.

Do you want to continue, Ms. Faille?

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Yes, I have a question. Given that we just went through a more difficult economic period, the Canada Revenue Agency established a source deductions policy. When a company goes bankrupt, the government makes deductions at the source for a certain number of months. I'm wondering how the government collects that money and if it manages to recover the entire amount owed. Also, where do those amounts figure in the Public Accounts? To give a more specific case, how much money was recovered from Nortel?

Moreover, the Canada Revenue Agency and, perhaps, Industry Canada give tax credits through the SR&ED program, the Research and Experimental Development Tax Incentive program...

[The Chair, Liberal, Joe Volpe]

You need to wrap up, Ms. Faille.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Where in the report are these amounts? Perhaps you could give us an overview or provide it in writing.

[The Chair, Liberal, Joe Volpe]

Mr. Ralston, if you wouldn't mind addressing that question, Madam Faille would appreciate it in writing, and so would we.

[James Ralston]

All right. There's only one part of it that I could attempt to respond to immediately, and that is just to comment on the source deductions and how they would appear in the public accounts.

The public accounts are prepared on the basis of accruals as opposed to cash payments, so in point of fact the numbers here are predominantly based on assessed taxes based on the filing of taxpayers' returns, not on the cash transactions through the source deduction system.

There are some technical exceptions I won't get into, but by and large, we are talking about an accrual system here.

[The Chair, Liberal, Joe Volpe]

Thank you, colleagues.

Mr. Ralston, let me just finish off for a moment on something you said earlier with Mr. Wiersema. On behalf of all committee members, we like to see people actually cooperating in order to produce some documents that all Canadians can feel comfortable with in determining that their government is making decisions based on a common set of facts that everybody understands and has access to.

I note in the Auditor General's letter, which you raised, at the bottom, in the last paragraph—and you'll correct me if I have a wrong impression, Mr. Ralston—it says:

One way of doing this would be through audits of departmental financial statements. However, if the government does not intend to require audits of departmental financial statements, we will adjust our approach to the audit of the Public Accounts and conduct periodic performance audits in order to provide assurance to Parliament on the strength of the controls.

Should we detect any difference of opinion there and direction about where we will go on this, that there might be some friction between the two offices? One is an agent of Parliament. The other one is the Comptroller General and Treasury Board.

[James Ralston]

With respect to the remark that you cited, my sense of the Auditor General's remarks was that whatever decision the government ends up making, the Auditor General's audit approach can accommodate one decision or the other.

I would also just point out, and harking back to our earlier discussion, one of the options that the Auditor General has, even for the public accounts audit, is the controls-reliant approach, which we discussed at the earlier meeting.

To the extent of the work we're doing to strengthen internal controls, I would expect the Auditor General would still look at those improvements, and even in respect of the public accounts audit, they may be able to find opportunities to rely on controls as they improve. That may also have been in their minds when they wrote the words that you cited.

[The Chair, Liberal, Joe Volpe]

I don't detect an interest in responding to that, Mr. Wiersema. Suffice it to say that all colleagues have that letter before them. You don't have to be very long on this; 30 seconds is good.

[John Wiersema]

I can do it in 20 seconds, Mr. Chair. I don't have a great deal to add.

I had a hand in writing that letter. I am aware of that letter the Auditor General sent. I believe it's quite clear. As Mr. Ralston has indicated, if the government decides not to proceed with audited departmental financial statements, we will adjust our own audit plans accordingly.

We will deal with some of the issues we might have dealt with in an audited departmental financial statement through our audit of the public accounts and through performance audits. I believe that's what the Auditor General's letter indicates.