Finance Committee on May 12th, 2020

[James Cumming, Conservative, Edmonton Centre, AB]

Well, thank you for that.

On your audit related to the COVID emergency spending, will it include—and I suspect it will—the efficacy of the programs that were put in place? Many of them have cliffs, or they're based upon revenues of companies and the revenue is falling or gaining, and people could stop getting the subsidy or continue getting the subsidy. Into what kind of depth will you be able to go to make sure that the programs are doing what they're intended to do?

[Sylvain Ricard]

Difficult again.... As I mentioned earlier, we are still somewhat early in the plan to decide which program we will choose for this year, let's say, and then maybe we'll decide that there's enough for the following year, and then, for those programs, what angle, scope and criteria we will use for the others.

As a minimum, we're there to make sure that, overall, the program is well managed and well delivered, so obviously we will want to make sure that there was some good planning done and that decisions were based on information. When you refer to that criteria that organizations had to meet some test or some conditions to have access to this, we will want, as a minimum, to make sure the departments have in place all the means to confirm that, monitor that and deal with any adjustments, if there is a need for adjustments in the conditions going forward, and/or to follow up with the organizations if they don't meet the conditions and they're not supposed to have access to the funding.

[James Cumming, Conservative, Edmonton Centre, AB]

You mentioned that you have three audits that are complete and ready to go, except that Parliament is not sitting in its normal fashion. What are those three audits that are ready to go?

[Sylvain Ricard]

We had to inform Parliament through the Speaker in late March or mid-March that, given the conditions, we could not table our reports on supplying the Canadian Armed Forces, immigration removals and student financial assistance. Again, those three are ready to be tabled. Whenever the public accounts committee comes back, we will reach out to them and see what the way forward will be.

Obviously, in light of the current circumstances, we will have to reflect on whether that has any impact on any of those three audits, but we'll take it from there based on discussions with the public accounts committee.

Again, those are the three that we were to table. I think March 24 was the date.

[The Chair, Liberal, Wayne Easter]

Okay. Thanks to all of you.

We'll go to Mr. Fragiskatos and then to a fairly quick round with Mr. Brunelle-Duceppe.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much, Mr. Chair, and thank you to the Auditor General and Mr. Hayes for appearing today.

Mr. Chair, it could come as a shock to you, but the new-found interest that Conservative colleagues have in the work of the Auditor General could be questioned for its sincerity. The Harper government, after all, cut $6.5 million from the budget of the AG and 60 employees from the AG's budget.

This federal Liberal government restored that funding, but I think it's important to put on the record, because if we're going to be consistent in recognizing the respect of the work that is completed by the Auditor General—and I think it is very important work, to be clear—then we have to be certain about what past governments have done. From there, we can judge the sincerity of particular questions, but I don't want to digress too much.

Mr. Ricard, could you give us an idea of the work that was done by the Auditor General's office during the time of the post-2008 financial crisis and the sorts of questions that the office examined at that time?

[Sylvain Ricard]

I'm sorry, I don't think I have much to say except that the one that comes to mind—my point is that there may be others, so I'll ask Mr. Hayes to perhaps expand on this—is an audit of the initiative that was put in place way back then to invest in various areas in the country.

Mr. Hayes, I don't know if you want to expand on that one.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Before you do, Mr. Hayes, just to be clear, I ask the question as a way of understanding certain questions that were asked then that could be applied to studying the situation now and in the coming months as a post-recovery economic plan begins. It's already unfolding, but this is something that will be with us for some time. It's about applying what we saw the AG's office do at that time and seeing whether the same sorts of issues could be examined—or not, because obviously this is a very different downturn in shape and form. I think comparing and contrasting is useful.

[Andrew Hayes]

Indeed, the economic action plan work that we did in 2009 and 2010 is probably the most instructive, at this point.

To give you a brief history, in March 2009 then auditor general Sheila Fraser wrote to the secretary of the Treasury Board to discuss what expectations we would have as an office, including coordination and integration both within the federal government and with provincial governments' effective management and control over spending. Ms. Fraser noted the importance of establishing a high-level oversight committee that could help to steer programs and adapt to situations that could come up.

We delivered our first report on the economic action plan in fall 2010. I suppose it was similar to the situation we're in now, which is auditing in real time. At the time, we looked at whether the programs and processes were designed and streamlined in a way that would allow the government to act quickly to get funds out where they needed to be. We looked at eligibility criteria and whether early funding was based on eligibility criteria, whether central agencies paid attention to risk and mitigated those risks, and whether the government met its quarterly reporting requirements.

In the second economic action plan audit report, which we delivered in the fall of 2011, we talked about the government's monitoring of progress and spending. We identified some opportunities for better performance measurement and reporting. I think looking back at those audits would probably be the most instructive for this current—

[Peter Fragiskatos, Liberal, London North Centre, ON]

Mr. Hayes, are there lessons learned from that experience that this federal government could keep in mind when it comes to the planning that's already taking shape, in fact, and when it comes to the economic recovery that we're going to see in the next few months and perhaps next few years?

[Andrew Hayes]

Right off the bat, I think we were clear. We wrote to the government early on to say that while we recognize they need to move quickly, it's important to ensure that decisions, rationales and processes are properly documented. Of course, we'll be looking at the same ideas in terms of financial management control and eligibility. The theme of reporting and transparency will obviously be a very important one that we will be looking at as well.

[The Chair, Liberal, Wayne Easter]

We'll have to end it there, folks.

We'll go to two-and-a-half-minute rounds for the next two questioners.

We have Mr. Brunelle-Duceppe, followed by Mr. Julian.

Alexis.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Thank you, Mr. Chair.

My question is for Mr. Hayes.

In the context of COVID-19, of course the government is loosening the purse strings to bring in a number of measures, but I see a bit of a paradox here. I'd like to get your opinion on this.

In 2009, Canada joined other G20 countries in committing to gradually eliminate the ineffective investments and subsidies being injected into the fossil fuel sector, including dirty oil in Alberta. It appears that not very much has been done since, and in fact, the federal government has invested billions of dollars in the industry. Consider for example its purchase of Trans Mountain and oil tanker cars and its subsidies to businesses. We understand that the oil industry is having serious difficulties. That much is obvious. Should this not actually be taken as a sign that the government should stop investing public money in this sector, and invest instead in areas that will foster the emergence of a non-oil economy, especially in Alberta?

[Andrew Hayes]

First of all, I think it's worth noting that the audit we did on fossil fuel subsidies was conducted after the government had already committed to eliminating the inefficient subsidies. I would add that our work focused only on that point, and not on the government's policies.

Mr. Ricard, would you like to add anything?

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

I'm satisfied with that answer. If I have enough time, I'd like to ask Mr. Ricard another question.

Mr. Ricard, the Auditor General carries out audits after the fact, but what parliamentarians need most right now is someone to keep an eye on all of these extraordinary programs in real time, to ensure that some degree of control is exercised.

Can you tell me briefly, considering the scope of spending that is happening right now, whether the Auditor General would be able to carry out real-time audits in order to raise red flags in case of any problems, instead of simply checking the books after the fact?

[Sylvain Ricard]

Yes, it is possible to audit in real time. Mr. Hayes talked about our audit of Canada's economic action plan, which was launched in 2008 or 2009. As I mentioned earlier, we can do interim reports, and we will not wait until the end of the process to present our reports.

So yes, we will do them as we go along. We are in the planning process and just starting to communicate with organizations. We're beginning our work, and we won't wait for the crisis to be over if we have concerns to raise. We'll do so in due course rather than waiting to produce a huge report at the end. It's quite possible that we won't have any other reports to present. It is entirely possible for us to do that as part of our work.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Thank you very much to both of you.

[The Chair, Liberal, Wayne Easter]

We turn now to Mr. Julian. First up in the next round will be Mr. Morantz.

Peter.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chair.

My question is for Mr. Ricard.

When I look at the reports presented by the Office of the Auditor General of Canada over the years, I see references to a lack of transparency on the part of web giants. You also touched on the subject of tax havens.

As we know, Canada is missing out on tens of billions of dollars that should be part of the common good of Canadians.

What can you suggest to help us create a fair tax system?

Ultra rich web giants and large corporations that make huge profits invest in tax havens. They take their profits out of the country to avoid paying taxes.

In the context of COVID-19, how can we stop this from happening? We could use those financial resources to get out of the pandemic and the resulting economic crisis that goes with it.

[Sylvain Ricard]

I'm inclined to first say that there's a very important audit to be done just on that topic.

As part of the audits we need to do right now in the context of COVID-19 and infrastructure, I'm not sure how much we'll be able to look at that aspect. Those are obviously areas where we would expect the Canada Revenue Agency, for example, to play its part in ensuring that everything is being done properly.

Obviously, this must be done in accordance with the existing tax laws. I'm sure you understand that I can't comment on that, as those are policy decisions. However, since a legislative framework regarding taxation exists in Canada, it's absolutely crucial that the comprehensiveness of the tax base be protected and that the players involved play their parts.

Considering the scope and complexity of the matter, right now I can't commit to auditing that thoroughly in the present context, but obviously, it's important.

[The Chair, Liberal, Wayne Easter]

Thank you both.

We'll move to Mr. Morantz, and then Mr. Fraser.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

This is a very interesting discussion. Not just for me as an MP but as a Canadian citizen, Mr. Ricard, I am alarmed by what you've told the committee today. It's very sad, and the government should be ashamed that you have to come to committee to make your case just to do your job. The function of the auditor is a fundamental check-and-balance in our system, particularly when we're embarking on massive programs like this to deal with the crisis.

I think my preamble informs the question. Just yesterday, a news report in the National Post said, if this story is true, that public servants are being directed to ignore claims of fraud, and that 200,000 files have been red-flagged.

I wonder if you could comment on whether you have concerns about the accountability in these programs. I know one of the checks and balances in the program was supposed to be you, but apparently you may not have the funds to be in that role. Therefore, I wonder if you could comment on whether you think the checks and balances in the current emergency programs are sufficient or not.

[Sylvain Ricard]

At this point, obviously I cannot comment on the status of the checks and balances, the controls, because we haven't been out there doing the actual work. We are currently planning the audit work, but in regard to what you're referring to, those are the types of elements we've covered in other audits.

We've done audits in the past on payments of employment insurance benefits. There are two sides to it, the payment going out to the right people who meet the conditions, then once that's not the case, what's being done by the organization to monitor that side of it and recover the amounts that have to be recovered.

I don't know if Mr. Hayes wants to add to this.

[Andrew Hayes]

I will add a little. Fraud risks are always part of our planning process, and when there is potential for errors in these kinds of programs, we will look for that in our audit work.

I think Mr. Ricard was referring in part to an audit of EI overpayments that we reported to Parliament in 2013. One of the things we mentioned at that time was that while the department had to balance the need to get money out, it also had to make sure it was done accurately. In a time of speed right now, it's important for us to look at the way the government is going to recover any errors.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you.

Mr. Ricard, it seems rather dramatic to me that you have to come here and make your case. I feel awful for you, because this shouldn't even be a question that your office is properly funded. I don't know how I'm going to explain this to my constituents.

When you were turned down for the $10 million in the budget process in 2019, did your office made any other overtures and asks to government officials for further funding and were they also rebuffed?