Finance Committee on June 5th, 2012

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is the 70th meeting of the Standing Committee on Finance. Our orders today are pursuant to the order of reference of Monday, May 14, 2012. We are studying the bill.

Colleagues, as you know, we dealt with parts 1, 2, and 3 yesterday at clause-by-clause consideration. We have part 4 to do this afternoon and this evening. We are therefore going to start with clause 170, as you see in front of you on your agenda.

I will just remind you that we will finish once we get to clause 753. We will go back to clause 1. At that point, we have, as prescribed by the motion, until 11:59 tonight for discussion on these clauses, at which point I will have to put all the votes on any outstanding clauses.

I thought, colleagues, it would be easiest to proceed in the way we proceeded in terms of our discussion of the bill. That was to do part 4 by division. I will identify the clauses for that division and then have debate over the division as a whole. Obviously, we have officials here if there are any questions by members. I think that's an easier way to proceed. I am strongly suggesting we do so in that measure.

I know we have the five-minute rule with respect to clauses, but I would ask members to allow me to be a little flexible with the timeline. I don't think we'll use five minutes per clause, but I think on one division we should allow a little more flexibility than five minutes if one party wishes to make a number of points. I will just remind you to make your points as best as possible to the clauses and the subject matter therein. I will obviously be as respectful toward colleagues as possible.

Therefore, I will start with division 1. Division 1 deals with measures with respect to the Auditor General of Canada. It includes clauses 170 to 204. I am looking for discussion.

I will go to Mr. Marston, please.

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

Thank you, Mr. Chair.

Welcome back, Mr. Boissonneault.

Mr. Chair, when we first got the documentation on this, there had been a lot of discussion about the fact that old age security hadn't been talked about and that those changes weren't even raised in the last election. We looked at changes to employment insurance, and again, they hadn't been talked about, nor were the kinds of changes regarding the environment that are proposed in this bill.

However, the ones that jump out at me are the clauses that will remove the Auditor General's oversight from a number of agencies. The government members on this committee will tell us, and from their perspective it may be true, that the Auditor General offered up these changes. Perhaps he did, but he did so because he was told he had to cut a certain amount of money out of his operating budget. If it were not for the budget cuts by this government, I doubt very much the Auditor General would have offered up these changes unless he was put into that position.

It's clear the government is prioritizing significant budget cuts across the board in the areas I already talked about. They're making that choice in this case over the oversight of government operations and government accountability.

I'm one of the people who came into this House in the 2006 election. During that election we repeatedly heard from the opposition, which is now the government, about accountability and transparency. All of this certainly flies in the face of those proclamations in that election. They pointed their fingers toward the previous government about the things that were hidden, the mismanagement, the sponsorship scandal, and all of the things in that area, and said they were a significant problem. We agreed. Our party said there had to be more accountability.

When the Conservatives formed government, there was supposed to be a breath of fresh air in this place, but with this omnibus bill they are trying to ram legislation through our Parliament in a fashion that we've not seen. Yes, there have been large bills before, but never as comprehensive in the changes they were making.

The really serious part of this, and I've expressed this in my frustration here several times, is that this is happening without allowing Canadians to comment. It's happening without giving MPs the opportunity to undertake the due diligence necessary to thoroughly examine it and the implications, not only for today's citizens but for future generations.

I'm no expert on the environment. I'm not on this committee because I'm an expert on the environment. When those kinds of things are put before us, the EI changes I know something about, and OAS I would know something about, but the comprehensive changes are very challenging for all of us.

However, reducing and in some cases eliminating the oversight of the Auditor General over the operations of government, as I've already said, flies in the face of everything the Conservatives purported to represent when they were running in 2006. People at that time put their faith in them. Who would have thought that this type of thing would happen?

At this point I'm going to reserve to come back into the discussion. I'll allow other people to get in, because I need to sit back for a moment.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

I have Mr. Brison on this point.

[Scott Brison, Liberal, Kings—Hants, NS]

I have some other points on this.

I've actually participated in expenditure review processes as a minister and as a member of an expenditure review committee of cabinet. It's possible to be penny-wise and pound foolish, Mr. Chair. The reality is that investments in scrutiny and accountability and resources for the Auditor General or for the Parliamentary Budget Officer can yield significant savings to government. Reductions in these resources and commensurate reductions in scrutiny and accountability quite potentially will yield waste, because without that constant light being shone within any government, it's more difficult to ensure that respect is being given to every hard-earned tax dollar we receive in Ottawa.

I know the genesis of these decisions emanated from an expenditure review process whereby the Auditor General was told to come up with some savings. In that context, his office would have put forth areas that were deemed less of a priority than perhaps some other areas, but the reality is all of these areas are important. I'm going to go through some of these important agencies and councils and boards. It's not just a question of respect for tax dollars and ensuring good value for tax dollars. It's a question of performance. The vital oversight given and input garnered from these agencies is essential. The oversight by the Auditor General is important.

I think of something as essential as the Canadian Food Inspection Agency and issues around food safety. The idea of any move to reduce scrutiny of these agencies is penny-wise and pound foolish.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mrs. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Chair, we all understand that the Auditor General does incredibly important work, but I think Mr. Marston indicated at the very beginning that it was the Auditor General, not the government, who deemed that these audits were unnecessary.

The other important feature is that in October 2011, there was a letter to the chair of the public accounts committee, NDP member David Christopherson, and at that time the Auditor General's office announced their intention to seek these amendments. At that time they also made a case in terms of why these amendments would eliminate audits of lesser importance.

Mr. Boissonneault, is that portraying accurately what happened? Was there a response from the committee?

[Gordon Boissonneault, Senior Advisor, Economic Analysis and Forecasting Division, Demand and Labour Analysis, Economic and Fiscal Policy Branch, Department of Finance]

I do know that a letter was submitted to the standing committee, as you said. I'm not aware of any response from the committee.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

If the committee had any concerns, since October, 2011, they have had significant and ample time to respond to this issue.

[The Chair, Conservative, James Rajotte]

Thank you, Mrs. McLeod.

I have Mr. Marston, Monsieur Caron, and Ms. Nash.

I'll start with Mr. Marston.

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

Thank you again.

We have expressed our concerns. Beyond the point of accountability, it's the case for transparency that was made in 2006. You have to consider what happened with the G-8 slush fund to be very concerned.

We had very serious concerns when the government announced its intentions to cut the auditing powers of the Auditor General. We had additional concerns when the Conservatives refused to allow the Auditor General to testify before a parliamentary committee. It's one thing to receive letters, but it's quite a different thing for a person to give face-to-face testimony. We questioned at the time why they wanted to silence a person responsible for ensuring that taxpayers' money is spent properly. Again, this is an affront to the very things they have purported to stand for.

One wonders why the government seems so intent on taking away the Auditor General's powers. This is the single largest move to restrict accountability in Bill C-38. It is a broad reduction of the oversight powers of the Auditor General.

Let's think about the significance of removing the mandatory oversight of financial reporting by 12 agencies. I'll name them: the Northern Pipeline Agency; the Canadian Food Inspection Agency, and people will give testimony about their fears of what impact that could mean; the Canada Revenue Agency; the Canadian Transport Accident Investigation and Safety Board; the Canadian Institutes of Health Research, the Canadian Centre for Occupational Health and Safety; the Exchange Fund Account, which is under the Currency Act; the Natural Sciences and Engineering Research Council of Canada; the Social Sciences and Humanities Research Council of Canada; the Canadian Polar Commission; and the Yukon Surface Rights Board. The member for Yukon is sitting beside me and will comment shortly.

[Dennis Bevington, NDP, Western Arctic, NT]

The Northwest Territories.

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

I was close. It's in the vicinity.

These cuts undermine a very critical role played by these trusted oversight bodies. I'm not suggesting in any way that there are problems with those particular bodies, but the Auditor General, that office, is intended to offer confidence to the Canadian people.

We had the CSIS inspector general and the National Energy Board, among many others.

The government is silencing institutional checks and balances on the government's ideology. From our perspective, we see that the government has an ideology that's contrary to what it said in 2006 about transparency and accountability.

The cuts call into question Canada's food inspection and public health regime by removing critical oversight powers of the Auditor General in relation to the Canadian Food Inspection Agency, all while providing an avenue and paving the way for opportunities to privatize a number of essential inspection functions. We heard from witnesses about their concerns about farming out the inspections. They were quite sincere.

The Auditor General does important work on behalf of all Canadians to ensure that taxpayer money is spent wisely. Why are the Conservatives shutting this down?

The Conservatives' cuts to the Auditor General's office will mean one thing, and that's less accountability. Back in 2006, that was one of the primary reasons the Conservatives were successful in defeating the previous government.

I've said that we have faith in those listed agencies, but from time to time faith gets violated, and from time to time people get caught doing things they're not supposed to do. When it comes to financial accountability, the person who catches them is the Auditor General.

You have to ask yourself how this aligns with the purported accountability and transparency the government says they represent.

[The Chair, Conservative, James Rajotte]

Thank you.

Monsieur Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Chair, I heard what Ms. McLeod suggested earlier. Yes, the Auditor General's office proposed those changes voluntarily and sent a letter to that effect. It even told the Standing Committee on Public Accounts in advance that it was going to voluntarily review those programs or audits. I was a member of that committee at the time.

But what is being left out of the story and what Ms. McLeod did not mention is that the Minister of Finance has himself sent a letter to the Auditor General or to his office asking him to comply as much as possible with the spirit of fiscal restraint, meaning the direction that the government was going to take. Therein lies the rub. We have reason to believe that the Auditor General would not have provided the list of programs or government agencies whose financial statements he would no longer audit, if the Minister of Finance's letter had instead suggested he carry on with the audits in the same way as before.

Clearly, if a letter from the Minister of Finance asks you to make changes—voluntarily, of course—and to conduct fewer audits, that is one thing. But getting a letter from the Minister of Finance asking you to conduct the audits as if the office were independent will have the opposite effect. The auditor is doing it independently, but at the suggestion of the Minister of Finance. We think that is problematic because parliamentary oversight organizations should be excluded from any government austerity measures. But that was not the case here.

[The Chair, Conservative, James Rajotte]

Okay. Merci.

I have Ms. Nash, and then Mrs. Glover, please.

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

Briefly, I want to also add my concerns to the changes in this bill that would eliminate the Auditor General's oversight to about a dozen agencies.

The Auditor General is, and has been, enormously respected and trusted by the people of Canada. That oversight is an important check and balance for government institutions and agencies that we rely on. The Auditor General is a source not only of fiscal accountability but of good common sense oversight to the way government operates.

I want to contrast the supposedly cost-effectiveness of removing the government's oversight with the Auditor General to the decision last fall by the government to spend $90,000 per day to hire outside private consultants to advise the government on how to make these cuts. They were planning to spend, at that point, almost $20 million to get advice on how to cut programs, services, and operating expenses in the federal government when we already have tools within the government to help the government do that.

I just have to say it's not a bad gig to get $20 million to advise the government to lop off environmental agencies, privatize oversight, and privatize government operations. The question is whether Canadians are better served with this approach. I would argue that they are not.

This is, of course, something one would have to argue should not be in this omnibus budget bill, but in fact I know it's justified because, ultimately, any time you chop government services or programs, it affects the budget. However, this more properly should be discussed in terms of what are the appropriate oversight measures and checks and balances in the government, and have a broader discussion on that measure alone.

To see this solely within the context of balancing the books I think can be short-sighted, because if you remove checks and balances that were put in place to prevent problems, to prevent waste, to determine where there are inefficiencies, to determine where government could spend its money better, you could be penny-wise and pound foolish, as my dear departed granny used to say.

I don't think this is appropriate in this bill. I don't think it is an appropriate measure for proper oversight and accountability for Canadians, and for this reason we're opposing it.

[The Chair, Conservative, James Rajotte]

Thank you.

Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I want to start by thanking Monsieur Boissonneault for coming forward again.

Perhaps through you, Chair, I'm going to ask the official to respond to some of the comments made by the opposition.

First and foremost, it is in fact the opposition that has commented numerous times now—Ms. Nash, Mr. Marston—as to the respectability of the Auditor General and how respected and trusted the Auditor General is. It is in fact the Auditor General who made these recommendations, indicating that these are duplicative and unnecessary.

Is that correct, Monsieur Boissonneault?

[Gordon Boissonneault]

That is his interpretation. That's correct.

[Shelly Glover, Conservative, Saint Boniface, MB]

So as a respected and trusted Auditor General—which is the way the NDP and in fact I believe Mr. Brison have demonstrated their faith in the Auditor General—I would question why they would now question that statement made by the Auditor General. But having said that, the Auditor General also made it very clear that because it's duplicative and unnecessary, it would be more efficient not to have to do them.

On top of all of that, there would be no loss of oversight whatsoever because there is still the audit of the government's summary of financial statements that would capture the information of departments and department-like organizations.

Is that not correct, Monsieur Boissonneault?

[Gordon Boissonneault]

That is correct.

[Shelly Glover, Conservative, Saint Boniface, MB]

I am going to give you a couple of minutes just to explain once again to committee how there is no loss of oversight here and how the comments that are being made are perhaps because they're misinformed. But if you could just demonstrate that there is no loss of oversight because the Auditor General actually has some other tools in his or her tool kit, that would be much appreciated.

[The Chair, Conservative, James Rajotte]

Mr. Boissonneault, would you just comment on the oversight issue?

[Gordon Boissonneault]

Yes. Well, the Auditor General had put forward these proposals to eliminate these particular financial audits for these particular organizations in order to be in line with current government directives that financial audits are not undertaken for individual departments and department-like agencies.

The reason they are currently undertaken for these organizations is that the AG is specifically mandated to do so within the enabling legislation, but the proposals would remove that requirement. In the view of the Auditor General, he believes that the annual audit of the summary financial statements of the Government of Canada is sufficient oversight of the financial operations of these organizations.

Moreover, the performance audit function of the Auditor General will continue unchanged. These organizations, typically on a three-year cycle or so, are given a thorough performance audit by the Auditor General of Canada.

[The Chair, Conservative, James Rajotte]

Thank you.