Public Accounts Committee on Nov. 23rd, 2023

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Yes, the COVID‑19 pandemic is over...

[Chris Forbes]

It's therefore only natural that the program should end.

I don't have any figures on potential bankruptcies...

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

It would be important to have them. Indeed, although the pandemic is over, the economic impacts that we are seeing in the current economic context, including inflation, are still being felt. We're no longer talking about the virus that led to COVID‑19, but rather the economic impacts of COVID‑19, which are still with us. Businesses have still not returned to their pre-pandemic levels of activity.

Has consideration been given to the current economic context?

[Chris Forbes]

The fact is that the level of economic activity, by which I mean gross domestic product, has increased. It's much higher than it was before the pandemic. Employment levels are higher than they were before the pandemic. Economic growth has returned to what it was before the pandemic. We are therefore better off than we were before the pandemic.

[The Chair, Conservative, John Williamson]

Right. Thank you very much.

Mr. Desjarlais, you have the floor for two and a half minutes, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I'd like to now turn to the Auditor General.

I was quite concerned that you found deficiencies in controls over key government IT systems. I know this is something that some previous audits touched on a bit, but I was pleased to see this in your report here, because I'm concerned about, in particular, the pattern that we're seeing continuing to grow.

To quote from the commentary provided on the audit, you mentioned:

We found deficiencies in controls over access to key systems that store and process data related to payments, receipts, and accounting records. This increases the risk of fraud or other wrongdoing.

It's quite troubling, I think. It's something that we as members of the committee on behalf of Canadians should attempt to better understand. My questions will be directed to this very troubling issue.

We also know that IT services have been some of the most affected by large increases in outsourcing over the last decade, particularly beginning in 2006. How does the increase in outsourcing of government IT services factor into this troubling finding of your audit?

[Karen Hogan]

Our findings on this were that employees within the federal public service were given access they didn't need to carry out their duties, so it wasn't related to outsourcing of an aspect of housing a data centre or using the cloud service provider. It wasn't related to that; it was really related to the access privileges were granted by an employer to an employee.

When someone has access they don't need to do their jobs, at times it could be incompatible or conflicting processes or transactions they can do that would require segregation of duties to ensure good stewardship of funds.

It had nothing to do with outsourcing, but more with the fact that certain doors were left open that should be closed to properly safeguard information and data in the government.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Did you find instances of fraud or wrongdoing in this regard?

[Karen Hogan]

When we found that there were weaknesses in these access controls, it actually caused us to change our audit approach. We felt that we couldn't rely on a lot of the IT-dependent controls. We had to do different procedures.

We also carried out extra work. We found that nothing came to our attention in that extra work to see that data had been changed inappropriately or that there was a data breach. However, it's important for the government to deal with these issues and make sure that employees only have the access they need to do their jobs.

[The Chair, Conservative, John Williamson]

Thank you to everyone for that.

That's your time, Mr. Desjarlais.

Mr. McCauley, you have the floor for five minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

Mr. Forbes, I have a question for you regarding the carbon tax carve-out in the Atlantic provinces. There is going to be a fair amount of reduction in the carbon tax taken in because of the home heating exemption.

Is that going to lead to a correlating drop in the rebates in those provinces?

[Chris Forbes]

We link the pollution pricing or fuel charge revenues to the climate action incentive payments, so yes, that would be corresponding.

[Kelly McCauley, Conservative, Edmonton West, AB]

There will be a corresponding drop.

When the fall economic statement came out, we asked finance and they weren't sure.

Has the policy been set yet?

[Chris Forbes]

The way the fuel charge proceeds work, we take those into a pot and that pot gets reallocated back out, largely through the climate action incentive payments.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks.

Mr. Huppé, Ms. Bradford brought up the lapsed spending. It's doubled since 2015.

What does it tell you when one out of every nine dollars of money granted or authorized by Parliament is being lapsed? Is it just poor planning on asking or poor planning on the follow-through?

[Roch Huppé]

Thank you for the question.

I have been a CFO for many years. When you run a budget in a department, you try to lapse as little as possible, to be fair. With sound financial management, you're trying to—

[Kelly McCauley, Conservative, Edmonton West, AB]

Regarding the question specifically, it's doubled in the eight years and 11% is being lapsed.

[Roch Huppé]

Yes, and there could be—

[Kelly McCauley, Conservative, Edmonton West, AB]

Is that just poor planning and they're asking for too much or are we authorizing stuff they have no ability to deliver and priorities are being missed?

[Roch Huppé]

When you have a lapse, you need to look at the reason for the lapse. Every lapse of every department should be unbundled to look at what the reason is.

We had a quite substantive increase in the lapse this year. One reason is the timing of the payment for one of the key indigenous settlements that happened with the department of ISC. Also, there was some lapsed funding related to COVID spending, which wound down.

With a lot of the lapses, it's usually departments that are in the business of...like Infrastructure Canada, which deals with a lot of huge projects. Again, the timing of the spend sometimes moves.

It's about planning; I am not disputing that.

[Kelly McCauley, Conservative, Edmonton West, AB]

They were dealing with those two years ago and three years ago.

[Roch Huppé]

The spend went up, but it's about planning. I don't disagree with you.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

Contingent liabilities have also doubled since 2015. What is driving it?

I assume it's first nations settlements, but are we expecting more significant growth in this way? Do you have an idea of what we're looking at going forward?

[Roch Huppé]

You're absolutely right that most of the contingent liabilities are liabilities in relation to indigenous claims. In the last few years, we've seen a lot of these litigations get settled and negotiated.

In the world of accounting, when we have one of these litigations where we estimate that there is a high probability that we're going to end up making a payment, we need to start—

[Kelly McCauley, Conservative, Edmonton West, AB]

Are we expecting similar growth or is your crystal ball not that clear on this issue?