Finance Committee on May 12th, 2020

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Ricard.

[Sylvain Ricard]

I'm going to say two things.

First, that is a process that belongs to the Privy Council Office. I don't know where the staff are and the status of all that, so I can't comment on that part.

What I can say—and this is something that I've said in other committee hearings—is that I want to reassure the committee and Canadians who are watching, that interim or not, I will do everything I have to do. I'm going to say whatever I have to say to do the job. I am representing an important institution, which is the Office of the Auditor General, so again, interim or not, that is not changing how I'm approaching the work.

[The Chair, Liberal, Wayne Easter]

Thanks, both of you

We're turning to Ms. Dzerowicz and then to Mr. Ste-Marie.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank our Auditor General. I want to thank you and your team for your wonderful work and for being here today, and I want to thank you for your extraordinary service to our country. Interim or not, we're so grateful to have you.

First, very quickly, I want to address resources. According to my notes, the Harper Conservatives cut $6.5 million and 60 employees from the Auditor General's budget. I know that our Liberal government, since we've come into office, has tried to commit some additional spending. In budget 2018, I know that we committed more than $41 million in additional funding to the Office of the Auditor General, which is a 16% increase relative to the 2015-16 fiscal year. Have you not received any of that yet?

[Sylvain Ricard]

In a nutshell, this can become a very complicated numbers game, but back in the strategic review, yes, we returned, on a voluntary basis at the time, I'm going to say $7 million.

Since then, what happened in 2017, as I mentioned, is that the former auditor general identified that we got to a point where we could not delay some important investments anymore. Over the years, we had to absorb new mandates, and so on and so forth, and did not have the capability to invest in technology—an important tool—so we got to a point in 2017 where we could not stand by the level of funding we were at after the review back in 2011.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thanks so much for that. I do think it's very important for your office to have sufficient resources to be able to conduct the important work you do.

I want to turn our attention to the motion of April 11, which you talked about, in terms of conducting an audit of the spending undertaken and money borrowed due to COVID-19.

First, what period of time will the audit cover, given that you must report your findings to the House of Commons no later than June 1, 2021?

[Sylvain Ricard]

We will start from the first initiatives that were put in place. We'll start from the beginning, basically, and at some point we will have to make a choice on where to draw the line.

Another thing I should probably say is that part of the solution may end up being for us to issue interim reports, so it may end up being that we will do some of this work in the coming year and year and a half, let's say, and more the year after. In the meantime, especially in the coming year, we may choose the approach of issuing interim reports if we have enough to bring forward in a relevant and useful way.

[Julie Dzerowicz, Liberal, Davenport, ON]

When you say “the beginning”, do you mean March 15, officially, or the first time we actually announced a program?

[Sylvain Ricard]

I don't have the exact date here, but I'll give an example. There's a report, the bimonthly report that is tabled to the committee. There's the whole list of initiatives there, so we will want to make sure that the report is all inclusive, from the very first initiative. From what we could see, I think the very first that we could remember are there. Again, I wouldn't want to be quoted on that. An auditor likes to have all of his facts straight before speaking, but I'm trying to illustrate that we will identify the very first initiative, and we're going to start from there.

[Julie Dzerowicz, Liberal, Davenport, ON]

Perfect.

Do you think the audit for COVID-19—this motion—will be different from any of the other audits regularly conducted by your office?

[Julie Dzerowicz, Liberal, Davenport, ON]

It's okay. Sorry.

Do you think the audit for the COVID-19 pandemic will be conducted differently from any of the other audits that are regularly conducted by your office?

[Sylvain Ricard]

No. I and everybody in the office take pride in the quality of our work. One of the reasons for the quality and the relevance of our audit work is that we can rely on very robust ways of performing our audit work. The same basic all-inclusive processes will be adhered to in the same way to ensure that we bring forward, in the same way as in the past, quality audit work.

[Julie Dzerowicz, Liberal, Davenport, ON]

Okay.

Have you already begun your audit? If so, can you comment on its progress and whether you've encountered any difficulties thus far?

[Sylvain Ricard]

I will ask Mr. Hayes to maybe add to this.

Yes, as soon as we saw the motion, we convened the leaders in the office and started the process. This is an audit where we will want to cover various elements of the initiative or the program in terms of the support to individuals and support to businesses, and the liquidity aspect. We could do that from the perspective of whether those initiatives were well managed, as a regular audit, but we would also want to make sure, as I said in the opening statement, that we have elements that are more in terms of the lessons learned and a way of improving for future events, if they ever happen.

[The Chair, Liberal, Wayne Easter]

Mr. Hayes, do you want to add to that?

[Andrew Hayes, Deputy Auditor General and Interim Commissioner of the Environment and Sustainable Development, Office of the Auditor General]

Yes. Thank you very much.

We have started our audit work. In the normal course, audit planning can take a number of months, and we're accelerating that right now. We are dealing with the senior public servants responsible for the departments that we will have to audit. We are recognizing, of course, that many of them are on the front line, and we don't want to distract from the services and support they're providing to Canadians right now. We're working with them to make sure we are able to conduct our audit work in a way that doesn't interfere.

That said, we are very keen on getting our work going, recognizing that we're going to manage logistical challenges as we go.

[Julie Dzerowicz, Liberal, Davenport, ON]

Perfect. Thank you so much.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

We'll go to Mr. Ste-Marie, followed by Mr. Julian.

Gabriel, the floor is yours.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Welcome, Mr. Ricard and Mr. Hayes.

I will begin with a comment for the chair, and for everyone.

Mr. Ricard, in your introduction, you made it clear that your office does not have sufficient funding to do its job properly. That is extremely troubling.

Mr. Chair, I think Mr. Poilievre's very pointed questions relate directly to COVID-19. We realize that the Office of the Auditor General of Canada does not have the resources needed to thoroughly analyze this crisis. With all due respect, I think his comments were entirely justified. We can only hope that this might spur the government to grant Mr. Ricard permanent status as Auditor General immediately.

My first question, Mr. Ricard, has to do with the Canada Development Investment Corporation, which will manage the large employer emergency financing facility. Normally this corporation would not manage government programs because it owns assets. Consider for example Trans Mountain, or General Motors Canada when they were nationalized, and so on. The Auditor General audited the corporation in 2018 and concluded that there were serious deficiencies in its governance regarding possible conflicts of interest within its board. The Auditor General also noted weaknesses with respect to board independence; risk identification, assessment and mitigation; and risk monitoring and reporting.

Do you think the Canada Development Investment Corporation is the appropriate vehicle to manage a government program, to decide who will have access to this assistance and to set conditions for ensuring that society as a whole benefits?

Do you think this is consistent with its mandate?

Thank you.

[Sylvain Ricard]

Unfortunately, I can't really comment on that question, since that is a policy decision. It's up to the government to decide which vehicles it uses to deliver services. I believe you're referring to weaknesses found as part of a special examination report.

Obviously, in terms of managing a program or certain aspects of a program as big as this one, it's important to ensure that proper controls and structures are in place.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Since your report in 2018, do you think the necessary changes have been made within the corporation to prevent those problems from cropping up again?

[Sylvain Ricard]

Unfortunately, I can't comment on that question. Special examinations are conducted according to the law at least once every 10 years. However, they can be done more frequently, depending on the organization and the situation, but basically, it's once every 10 years. At this time, we haven't done a follow-up audit since 2018.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

To the committee, I want to say that I find this very troubling. This Crown corporation has been proven to have many problems, and now it's going to manage a huge assistance program. I think we need to keep a very close eye on this.

Mr. Ricard, the government has made roughly $200 billion available in loans and loan guarantees. We're not really sure where this is going to end. The Canada account now has no upper limit. Parliament is voting only on spending, and those loans and loan guarantees will become expenditures once they are discharged after a few years. At that point it'll be too late to exercise even the slightest control.

Is there any way to have greater control over what's being done?

[Sylvain Ricard]

Obviously, any time loans and loan guarantees are offered, there's some risk involved. It will therefore be important to develop ways to track the risks being assumed by the government.

Right now, however, planning has only just begun, and there have been a number of initiatives. I'm sure you can appreciate that I'm not familiar with all the details of each and every initiative. That said, clearly, with $200 billion on the line, it'll be important to put a mechanism in place to make sure that we can reduce the risk we are taking on.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

So, it's important to have mechanisms, but for now, you're not in a position to suggest any specific, concrete mechanisms that might be useful.