Finance Committee on May 16th, 2012

[Gordon Boissonneault]

The Canada Revenue Agency, the Canadian Food Inspection Agency, and the Parks Canada agency all had this particular requirement in their legislation when they were set up to have the AG assess their internal performance reporting. It was felt at the time that as they were new agencies, this would help them establish appropriate practices in that regard.

These agencies have been established for some time now, and the need to assess the nature of performance reporting is no longer necessary. It's not something that is done for any other federal agency. This is why it was decided to discontinue this particular practice.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Was there nonetheless information when the Auditor General did these audits in the past? Indeed, we are talking about

assess the fairness and reliability of the information of the agency's performance.

What type of reports were there before? Are you saying that these reports were not necessary? There was nothing to improve at Canada Revenue Agency?

[Gordon Boissonneault]

I'm not familiar with what those reports over the past have revealed. That might be a question better suited for the Auditor General himself.

These were process reports on matters such as whether the agencies have been tabling their reports on time and whether the reports were comprehensive. It was more on the process than the actual content.

But I don't know whether in the past they may have indicated any issues or problems. I couldn't say.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

We see what is happening with food safety. Does the same thing apply in this case?

[Gordon Boissonneault]

It is.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Is there a chance of less transparency or accountability because the Auditor General is not doing these audits?

[Gordon Boissonneault]

These organizations have requirements to issue these performance reports. Those requirements are not affected by this.

They also will still be examined by the Auditor General as part of the performance reporting exercise that will happen on a regular basis. If they were to, for some reason, slip in their own internal reporting, that fact would certainly be captured by any future AG performance report.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

The government is saying that 12 organizations will not be audited by the Auditor General. You are saying that there are still ways to audit them and you are talking about processes that will be entrusted to either the House or the committees. Do you not think that the Auditor General's work is more thorough? Does he not gather more information and favour what we call transparency and accountability?

[Gordon Boissonneault]

He has deemed the current practice to be duplicative, to a very large extent. His assessment is that there will be no meaningful loss of information or transparency as a result of these changes.

[The Chair, Conservative, James Rajotte]

We have Ms. Nash next, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

If I understand your explanation, the finance minister didn't mandate that he wrote to the Auditor General and asked him, in keeping with the spirit of other cuts, whether he would identify some cost-saving measures, and he did so.

In terms of how this came about, we know that the government hired a number of consultants last September to the tune of $90,000 a day, and they were to advise the government on how to cut $4 billion at the time, on an annual basis, to federal departments. I don't know whether those consultants were retained for an extra year, but they had the potential to be retained for an extra year.

Did those consultants contact the Auditor General? Do you know whether their analysis in your department was what led to these particular changes in oversight being recommended by the Auditor General?

[Gordon Boissonneault]

That was not to my knowledge the case, but I'm unaware of what communication may have occurred.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thanks. We'll ask that later on as well.

But to the best of your knowledge, if there had not been a request and if there had not been the cutbacks in other areas, these were not changes the Auditor General would have just recommended on his own. He would not have changed the oversight.

[Gordon Boissonneault]

I can't say. Clearly organizations such as his do internal reassessments all the time. It's unclear whether these particular reforms would have happened or not.

[Peggy Nash, NDP, Parkdale—High Park, ON]

To reassure Canadians, how will we know now and in the future, if these changes are made, that the financial information of individual federal departments and agencies, especially the ones this change will affect...? With the oversight that is being removed, will these agencies and departments still be fairly audited and the financial information fairly and accurately stated?

You had said there is the opportunity to do this in-depth auditing, but it's not automatic. How will we have the same assurance that the tax dollars of Canadians are being fairly and appropriately spent if we're not getting that in-depth financial information on a routine basis?

[Gordon Boissonneault]

Again, this would probably be better answered by the Auditor General himself.

There is a combination of the annual audit of public accounts, which is quite comprehensive, as well as internal reporting that these organizations continue to do, as well as performance audits. I think together there is still a high level of inspection and verification that is occurring.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Is there anything further on this?

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Not on part 1.

[The Chair, Conservative, James Rajotte]

Thank you very much for being with us here tonight. We appreciate your answers.

We will bring forward officials for division 2, life-annuity-like products.

Welcome to the committee. Thank you for being with us here.

If one or more of you would like to give an overview of division 2 for the committee, we would appreciate that, and then we'll have questions.

Ms. Pearse.

[Jane Pearse, Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance]

Could I just clarify if you would like me to deal with a series of divisions? Or would you like me to deal with individual divisions?

[The Chair, Conservative, James Rajotte]

My understanding is that you can deal with divisions 2, 10, 11, 16, and 30. But why don't we start with division 2, and do questions on 2, and then we'll move to 10, 11, 16....

[Jane Pearse]

Excellent.

[The Chair, Conservative, James Rajotte]

Ms. Pearse, on division 2, then.

[Jane Pearse]

Thank you very much.

Division 2 deals with annuity-like products. As the committee members may know, there is currently a prohibition in the legislation that clarifies that banks are prohibited from engaging in the business of insurance, and this includes the issuance of life annuities. Primarily this is because a life annuity is based on an expectation of death—or an expectation of life, I suppose—and that risk is most appropriately addressed and dealt with by the regulatory regime applying to insurance companies.

In December 2011 the minister announced that the government would propose an amendment to prevent banks from offering annuity-like products, to ensure that the risks associated with these products are appropriately addressed by the insurance regime.

The amendment that you see in division 2 is to clarify the prohibition against banks offering annuity or annuity-like products.