Evidence of meeting #6 for Public Accounts in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was year.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Nancy Cheng  Assistant Auditor General, Office of the Auditor General of Canada
Jim Ralston  Comptroller General of Canada, Treasury Board Secretariat
Alex Smith  Committee Researcher
Benoît Robidoux  Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Michel Vaillant  Senior Director, Public Accounts Policy & Reporting, Treasury Board Secretariat
Sylvain Michaud  Executive Director, Government Accounting Policy and Reporting, Office of the Comptroller General of Canada, Treasury Board Secretariat
Douglas Nevison  General Director, Economic and Fiscal Policy Branch, Department of Finance

3:50 p.m.

NDP

The Chair NDP David Christopherson

Very good. Thank you so much. Your time has expired.

Now, we move to our vice-chair, Mr. Carmichael.

3:50 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

Thank you, Mr. Chair.

And thank you to our guests for your work today.

Ms. Cheng, I want to join my colleague Mr. Albas in commenting briefly on the clean opinion you've been referring to, and send our congratulations to those people behind the scenes who do all the hard work to get it to that level so that when you go in with an audit team, you have good data, good information to work with. Please extend our thanks to them as well.

I want to begin by talking about the results posted in this report. The public accounts state that the Canadian economy posted modest growth over the course of 2012 and in the first half of 2013, and that Canada recorded one of the best performances among G-7 countries.

Can you comment on what factors contributed to that growth, and perhaps provide some personal opinion?

Mr. Ralston, I will start with you, and then whoever of your colleagues would like to join in.

3:55 p.m.

Comptroller General of Canada, Treasury Board Secretariat

Jim Ralston

Mr. Chair, I think perhaps we could invite our colleagues from the Department of Finance to comment on that.

3:55 p.m.

NDP

The Chair NDP David Christopherson

Sure.

Over to you, Mr. Robidoux.

3:55 p.m.

Benoît Robidoux Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance

Thank you, Mr. Chair.

Despite being fairly weak over 2012–13, Canada's economy relative to other advanced economies is still doing very well. Again, despite exports being fairly weak in that year because of global developments, the domestic economy, which is consumption and investment by business, has been fairly strong in Canada's housing sector. It was kind of slowing at that time, but it was also contributing to growth. Those domestic conditions were good and supported the economy through that year. As a result, as many of our documents show, since the beginning of the recovery, Canada has been the best country in the G–7, relative to employment gain or GDP gain.

Effectively, we have been doing fairly well. Again, it's reflected in the domestic economy more than the export side, which has been fairly weak, apart from that year.

3:55 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

Thank you, Mr. Robidoux. I think that's an important point to make.

Clearly, we've come out of the two- or three-year decline in 2007, 2008, 2009, which was very challenging. As our economy recovers, it's important that we recognize that our economy is strong. It's not without its challenges in the future, and we want to make sure we have our eye on the ball, but I think your point is well stated: it's showing good signs and signals that the recovery is still under way.

According to the OECD—you talk about the G–7—Canada's total government net-to-GDP ratio stood at 34.5% in 2012, which was by far the lowest of our G–7 partners. Could you comment on the factors contributing to that, particularly when we look globally and we see debt issues that are of concern on the horizon in other countries?

I don't want to focus on them, I want to focus on us, but I get the impression from this information and this data that we're in pretty good shape.

3:55 p.m.

Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance

Benoît Robidoux

Yes, sir, we're doing pretty well there too, compared to other G-7 countries, compared to most advanced economies, although there are also advanced countries that do well in that respect, fairly small countries.

With respect to Canada, to explain that again, this includes the federal government, all the provincial governments, the Canada Pension Plan and the Quebec Pension Plan. All those levels of government are included in that to make sure that things are comparable across countries. It's compiled by the OECD to try and achieve the best comparables across countries. It reflects a fairly low debt at the federal level, a fairly low debt at most provinces--some provinces are almost in surplus. It also reflects net assets in the Canada Pension Plan and the Quebec Pension Plan to pay for future benefits of Canadians.

I would say that the stark difference beyond the low debt of both federal and provincial governments is the CPP and the QPP. Canada is one of the few countries that has set aside funds to pay for future pensions of Canadians. Very few countries do that, indeed, although it's the right thing to do.

3:55 p.m.

NDP

The Chair NDP David Christopherson

I'm sorry, Mr. Carmichael, your time has expired.

3:55 p.m.

Conservative

John Carmichael Conservative Don Valley West, ON

Thank you.

3:55 p.m.

NDP

The Chair NDP David Christopherson

Time flies when you're having fun.

Mr. Harris.

3:55 p.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Thank you, Mr. Chair, and thank you to everyone for being here.

I want to go back to the Department of National Defence. In reading through 2.41, there's a new resource management system being put in place that was due to be completed by December of 2013. Is that part of what's been pushed back to 2016, or is it something else? Has the whole thing been pushed back?

3:55 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Nancy Cheng

At the time when we completed the audit the department did not give us a firm deadline in terms of when they thought it would be completed. Subsequent to that, and in the response that they provided to this particular committee, they indicate that they are on track. That means they should be able to complete that by December of 2013, basically next month.

4 p.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

That's very good to hear because it seems that will solve many of the problems with asset management and pulled items that have been happening.

It does mention that there was a recommendation made to put interim controls in place. Were appropriate interim controls put in place to minimize the challenges that DND was having?

4 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Nancy Cheng

Mr. Chair, in terms of 2012-13, the audit that we just completed, those mitigating measures were not adequately put in place. That's why we were continuing to find errors. In the report here we indicate that they really need to put in some compensating controls, and we made some suggestions in terms of things that they could do and should do. Those elements seem to be reflected in their work plan, and for those they seem to go out to 2016 and maybe even 2017. That's in the response that was provided to this committee. We basically very recently got a copy of it ourselves, so we haven't really looked at it closely. It will be part of the audit that we will do in 2013-14.

November 20th, 2013 / 4 p.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

It's good to hear that the Auditor General's office is going to stay on top of that because, of course, we're continuing to find errors requiring numerous adjustments relating to evaluation, completeness, and accuracy of quantities. I mean, these are all things that take time and, of course, time in this case is money.

Has an evaluation been done of what cost to Canadians this delay has caused and the problems it has caused, because even only tracking them is taking more time? Do we have evaluation of how much time and money has been spent on that?

4 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Nancy Cheng

Mr. Chair, that's not really part of the scope of the financial audit so we don't have any data of that kind.

4 p.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Thank you very much.

With the transition to accrued accounting, how long would it take most departments to complete that? You said the Department of National Defence is much larger than the other departments. Is the amount of time that has been taken appropriate for that size of an organization?

4 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Nancy Cheng

Mr. Chair, I don't have a specific number in mind, but ten years seems like a long time. From our perspective, we feel they should be able to get farther along within a ten-year time span. Not too many other departments would have lingering issues of this kind. Otherwise we would have noted them in the observations to the public accounts. So National Defence is a bit of a unique entity that way.

4 p.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Of course, governing being about priorities, do you think additional priority placement by the government on this issue would help to speed matters up?

4 p.m.

Assistant Auditor General, Office of the Auditor General of Canada

Nancy Cheng

Mr. Chair, it is difficult to talk about priorities without comparing what else we're looking at.

Certainly from a financial reporting point of view, and I think it's well recognized and generally acknowledged, the Public Accounts is an important accountability document of the government, so it stands to have a certain priority.

Part of doing it right is making sure that inventory is appropriately valued and reported. That is a weakness that we have in our statements right now, but not to the extent that it is material; otherwise we would have difficulty providing a clean opinion. Nonetheless, it is still an important item.

4 p.m.

NDP

Dan Harris NDP Scarborough Southwest, ON

Thank you.

Yes, it's a testament to the exceptional work that has been done by all the offices involved and by public servants that there aren't that many weaknesses to be found in the report. Certainly I'd like to commend the work that everyone who has been involved in this has done.

I am new to the committee, and it is a little hefty to become involved with for the first time, so I'm going to leave my questions there. I'm sure we will have a chance to come back in another round.

4 p.m.

NDP

The Chair NDP David Christopherson

Yes. You were down to less than half a minute, anyway.

Thank you very much.

We will go over to Mr. Hayes, who now has the floor.

4 p.m.

Conservative

Bryan Hayes Conservative Sault Ste. Marie, ON

Thank you, Mr. Chair.

I'm looking at the analysis that was done. This is probably directed to Finance officials. Specifically, I'm trying to understand the significance of the interest ratio. I'm noticing that in 1990-91 this ratio was as high as 37.6%, and in 2011-12 our government brought it down to 12.5%, and it was further reduced to 11.4% in 2013, according to the analysis.

I think, looking at it, that this is probably a good thing, but I'd like you to elaborate for me what the significance is of a lower interest ratio to Canadians.

4 p.m.

Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance

Benoît Robidoux

Well, the best way to describe the importance of it for every Canadian is to consider that back in those days, effectively one-third of every dollar in tax collected by the government was used to pay down interest, to service the debt. It was not directed specifically towards current services or used, for example, to fund new programs or reduce taxes; it was used to pay down interest on the debt.

As of now, as you have said, we are down to about 11%, so only one-tenth of each dollar that we collect through taxes is used to service the debt, which allows more of the revenues to be directed towards services to Canadians or be used to reduce taxes so that Canadians pay less in taxes. This is the main effect of that reduction in the interest rate ratio for Canadians and the economy in general.

4:05 p.m.

Conservative

Bryan Hayes Conservative Sault Ste. Marie, ON

In line with that, sir, I notice that public debt charges from 2011-12 to 2012-13 decreased by $1.9 billion. What would be the reasoning behind the decrease in public debt charges?