Evidence of meeting #39 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Karen Hogan  Auditor General of Canada, Office of the Auditor General
Andrew Hayes  Deputy Auditor General and Interim Commissioner of the Environment and Sustainable Development, Office of the Auditor General
Annie Ropar  Chief Financial Officer and Chief Administrative Officer, Canada Infrastructure Bank
John Casola  Chief Investment Officer, Canada Infrastructure Bank

12:05 p.m.

Liberal

The Chair Liberal Wayne Easter

We'll officially call the meeting to order.

Welcome to meeting number 39 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference from the House, we are meeting on the government's response to the COVID-19 pandemic.

Today's meeting is taking place by video conference. The proceedings will be made available via the House of Commons website.

I'd like to welcome our witnesses for the first panel. From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada—congratulations and welcome—and Andrew Hayes, deputy auditor general and interim commissioner of the environment and sustainable development.

Ms. Hogan, you probably have an opening statement. We'll go to questions from there. Again, congratulations on taking on, in these kinds of times, a fairly substantial responsibility. Welcome.

12:05 p.m.

Karen Hogan Auditor General of Canada, Office of the Auditor General

Mr. Chair, thank you for inviting us to discuss the planned audit work of our office, including the work on the government's response to the COVID-19 pandemic. With me today is Andrew Hayes, deputy auditor general and interim commissioner of the environment and sustainable development.

My appointment as Auditor General of Canada was effective on June 8. I am very pleased to make my first appearance before a parliamentary committee as the Auditor General, and I look forward to supporting the government over the next 10 years.

When the interim auditor general, Sylvain Ricard, appeared before this committee on May 12, he discussed our audits of the government's investing in Canada plan and the government's response to the COVID-19 pandemic. He also spoke about the resourcing challenges that our office has been facing, and the difficult decisions that we had to make to delay other planned audit work in order to prioritize the investing in Canada and COVID-19 audits.

Today, I will build on the information that Mr. Ricard provided to this committee. Our audit of the investing in Canada plan is well under way. We know that there is considerable interest in this audit. We have been collecting and analyzing a significant amount of information.

We have also designed an audit approach that will allow us to provide as much information as possible to Parliament about the government's implementation and monitoring activities, and the nature of the projects that have been funded under the plan.

With respect to our COVID-19 audit work, we have been focusing on the government's spending related to health and safety protection, support to individuals and businesses, and other liquidity support and capital relief. We are also considering elements of emergency preparedness and early response actions. We expect to be conducting audits related to COVID-19 for many years.

Although our work is progressing, I think that it is worth noting that physical distancing and remote working arrangements present some challenges for our audits. We have seen that it takes more time and effort to work through the audit processes, and to access, receive and exchange information. I would emphasize, however, that we have seen a willingness and a concerted effort on the part of those that we audit to work with us.

We also know that there is important audit work that will have to be done at a later date. For example, information about the effectiveness of some programs and corrective actions that the government may take will only be available for audit in the future. For both the COVID-19 and the investing in Canada audits, we are exploring ways to report our findings to Parliament as quickly as possible.

At this point, it is likely that we will present specific audit reports to Parliament when they are completed, rather than take the traditional approach of setting a date for presenting a collection of reports.

I would now like to speak briefly about the unanimous motion that was passed by your committee on June 9.

We have always considered a unanimous motion from a parliamentary committee to be a very clear message to our office. The committee's motion calls on us to audit all federal programs associated with Canada's COVID-19 response, to conduct all audits requested by the House of Commons and to complete all previously scheduled audits. The motion also calls on the government to provide us with all the funding we need to carry out these audits and any other work that we deem to be appropriate.

We viewed the committee's motion as reinforcing the importance of our work and its value to Parliament. We pride ourselves in supporting Parliament to the best of our abilities. Given our current resourcing and funding levels, we need to be selective when deciding on the audits that we conduct. We will not be able to audit each and every federal program associated with Canada's COVID-19 response.

When I appeared before the Standing Committee on Government Operations and Estimates on May 29, I mentioned that once I was appointed, one of my first priorities would be to assess our funding needs in light of the current circumstances, which includes the significant work that we have been asked to do. At this point, I do not have an updated number to share, but I am confident that we will ask for a budget increase that will be greater than the $10.8 million of additional funding that the office requested in 2019 and in 2020. That amount was based on assessments that were done in 2017, and a lot has changed since then.

We are currently engaged in discussions with the Department of Finance about our funding. We expect that those discussions will continue over the next few weeks. Although we still believe that an independent funding mechanism is the best long-term solution, we are committed to exploring solutions with senior public servants so that our current funding needs can be addressed as quickly as possible.

If we encounter difficulties that cannot be overcome, we will be sure to inform Parliament; however, we are not sitting back and waiting. We have taken steps over the last week to maximize the performance of our audit work that we can do in the future. In particular, we launched a hiring process last Friday with the intention of significantly increasing the capacity of our performance audit practice. We know that it will take some time to hire and onboard the highly skilled people we need to do the work that you have asked us to do.

Obviously, we are taking some risks, because we have not received a permanent funding increase. On the other hand, if we do not start the hiring processes, we will not have the people in place to do our work. We will keep Parliament informed about our work and the impact on our resources.

Both Andrew and I would now be happy to answer any questions the committee may have.

Thank you.

12:10 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you very much, Ms. Hogan.

The question lineup for the first round will be Mr. Poilievre first and then Ms. O'Connell, Mr. Ste-Marie and Mr. Julian.

Pierre, the floor is yours. We'll go with a six-minute round initially.

12:10 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Thank you, Auditor General Hogan, and congratulations on your new role.

For the investing in Canada audit, were you planning to do a financial audit or a performance audit?

12:10 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

Our intention is to do a performance audit. We will be looking at the outcomes of the plan, as well as trying to look at the complete list and the nature of the projects within the plan.

12:10 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

All right. That's great.

As we know, the Parliamentary Budget Officer has shown that the so-called federal increases in infrastructure spending have not resulted in incremental construction of infrastructure assets across the country, because the money does not actually make it through all three levels of government and then onto the pavement. It gets gobbled up along the way down. The actual increased infrastructure that results from this federal spending is negligible at best and, in some cases, may even be negative, because the lower levels of government are pulling back more than the federal government is putting in, with one cancelling the other out.

It will be interesting to see whether your audit finds that there was any real material increase in the infrastructure that Canadians enjoy as a result of the monstrous increase in costs. Can you complete this work by January?

12:10 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

Obviously, I think it's fair to say that we'll expect some delays. COVID has impacted not only us but also the departments we audit. While we have begun, I do expect that there will be some delays in being able to complete a full audit from start to finish.

Our best is that we are trying to get something to you in the early part of the new year. It might not be the full audit. As I mentioned in my opening statement, we're exploring ways we could perhaps provide some insights into all of the projects and then perhaps deal with outcomes at a later date. We're trying to tackle this so that we can get some information to Parliament, because of the importance of the spending and the attention.

12:15 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

All right. I think Parliament does want answers quickly, but we want you to have the time to do a thorough job. We encourage you to tell us what kind of flexibility you need on time frames in order to get a complete job done for Parliament. I think we gave a deadline to the previous AG of January. That said, we understand the work overload and the funding deprivation that you're dealing with. What we really want is a quality job, a complete job, so we encourage you to work with us to tell us whether or not some flexibility might be required on the exact time frame of the final reports.

Secondly, when can you tell us what funding you will need? This committee has shown a desire to give you whatever you ask for, basically, which is a tremendous amount of trust, but can you get us a dollar figure soon so that we can push the government to deliver those dollars to your office?

12:15 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

Thank you for the offer on flexibility. I appreciate that. As you can recall, most of our audits take about 12 to 18 months to complete, and with the little delays with the pandemic, some flexibility is always greatly appreciated. Let me take that back and look at it.

As far as it comes to funding, as I mentioned, today is probably day 11 since my nomination, so we've been working hard over the last couple of weeks in looking at the historical ask and then refreshing it and amending it for all that's happened since then. We're working closely with the Department of Finance, so I would imagine that it would be a couple of weeks before we give them a new figure for our ask. I really would like to see that process work its way through. While I think it's not a perfect process, it's the process we have, and we'd like to work through that to see if we get the funding we need.

As I mentioned, if we feel that we have some issues, in the fall we'll gladly come back to Parliament and let you know if we run into any roadblocks on that front.

12:15 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Excellent. Thank you very much.

The final point I would make is that right now.... You know, 10 years ago, we had the Auditor General doing 28 audits per year. Now we have the Auditor General doing approximately 14 audits per year. Ten years ago, the budget for the Government of Canada was about $250 billion. Today, it's over $500 billion. In other words, spending has doubled and the number of audits has gone down by half, so mathematically that means that we're getting a quarter of the accountability we were 10 years ago.

The previous auditor general—Mr. Ferguson, I mean—never accused the then government of having shortchanged his budget, so this is really unprecedented. I'm hoping that the government will correct the shortfall that it has created, and you will have the finance committee as an ally in pushing the government to do that.

Let's move on to the COVID response audit. What is your sense of the areas that you would focus on? You've said that you can't audit all of the COVID programs—it's just too vast—but is there a specific area on which you would like to focus your office's attention?

12:15 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

We're almost at a point where I believe we could publish a list of topics that we're considering looking at. The way we've tackled the broad spectrum of what's going on in COVID is that we've looked at it in a short-term, a medium-term and a long-term aspect. In the short term, in addition to looking at overall preparedness, we are planning and have started to look at personal protective equipment, at Canada's food supply and.... I'm just trying to find the third one that I listed.

I'm sure, Mr. Hayes, you'll remember the third one. We were just talking about it this morning.

12:20 p.m.

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

Yes, indeed. The spending and design of the CERB was the other main area that I think we were going to mention.

12:20 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

Thank you, Andrew. It came to mind just as you mentioned it.

12:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Yes, that's a big one.

12:20 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

Yes, obviously.

12:20 p.m.

Conservative

Pierre Poilievre Conservative Carleton, ON

Thank you.

12:20 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, all.

With that we'll move on to Ms. O'Connell.

12:20 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you so much, Mr. Chair.

Auditor General Hogan, congratulations. I'm really excited to meet you and to be here.

Prior to getting into my questions for you specifically, I'd just like to offer some context.

I'm so glad Mr. Poilievre went down memory lane because I was reading this morning the opening statement from the interim auditor general, Sylvain Ricard, when he appeared before the public accounts committee. It outlined for me why Conservative cuts continue to hurt our democracy and accountability in this country.

In those statements it talked about what Mr. Poilievre brought up about the reduced number of audits that are happening currently. Even though we increased the budget in vote 1, a lot of that money went to fund the underfunded staffing and technology that was needed, which was cut from 2014-15, including payroll and Phoenix, another Conservative scandal that has set us back many years. I think I read in his comments that something like one-third of new funding would still be going to paying back, essentially, the staff who had to be cut in 2014-15. You didn't cut the staff, but you couldn't afford to pay them based on the Conservative cuts.

I bring this context up not to put you, Auditor General, in a political position to comment on that, but these seem to be the facts that were spoken of to public accounts. The fact is that a lot of the existing—and this isn't even COVID-related—expenses are actually due to those previous significant cuts, years of inability to get the expertise as well as the technology needed for these more complex audits, so they couldn't be done and we fell behind. Now a lot of the funding increases or bringing those levels back up really just goes back to playing catch-up, because the Conservatives decided that accountability wasn't important during their mandate.

What brings us to today and my question for you, Auditor General, is moving forward, because I fundamentally believe in an independent, accountable Auditor General for all governments—moving forward, dealing with the fact that we're playing catch-up based on Conservative cuts that are still hurting us today, and moving forward on a situation like COVID, which has had significant, obviously unprecedented, unforeseen changes in every department.

I know that one of the recommendations for moving forward on funding was an automatic annual adjustment based on expenses. If that were the process, notwithstanding the increase needed to catch up, which I understand you're making and will be clear, but moving forward, if an automatic annual adjustment were made and a situation like COVID came up, wouldn't that just blow the budget in terms of expenses and put us in this exact same position of how you both continue the regular operating work of the Auditor General's office and take into account the unforeseen, unprecedented studies and the function of your office?

What is the best mechanism, which COVID is now teaching us, to be flexible and to keep doing the regular work in addition to some of these unforeseen things, so that your office can then provide services to Canadians?

12:25 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

I think some of what we've learned from the past cuts and maybe what COVID is teaching us.... Back in 2016 or so, when the entire government went through a reduction in its budgets, we did what we felt was the right thing for us to do as Canadians, and also looked at ourselves and took some cuts.

Since then, there have been new mandates given to us, as you mentioned, that were not funded. Whenever we were faced with that, we had to make difficult decisions that required us to divert some money that would have been invested in IT to deal with some of the financial work, mostly, that we received without funding, as well as an expansion of our mandate on the review of the sustainable development plan. If we fast-forward to what we've learned from COVID, while that was a place where it made sense at the time to slow down our investment, I think everyone across the country is realizing that reliable IT is something that is absolutely important.

I know a good part of our funding request will include helping us deal with that IT gap that we have.

Going forward, what might a funding mechanism look like? There are many options out there. There are other countries that have independent funding mechanisms. As you mentioned, adjusting to expenditures is one way. Some of the difficulty with that is that it's not predictable and could ebb and flow. When an audit office like ours relies so heavily on our human capital, it takes time to attract and hire and retain those people. You can't just hire them and let them go. We do need some form of stable, predictable funding.

When we put in a new funding request to the Department of Finance, we will as well include in there an idea and a recommendation on our front as to what might be a possible funding mechanism. Hopefully we can then open the dialogue on a more long-term solution. I see our funding request getting us through the three to five years, and then hopefully we can look at a more long-term solution for the back end of my mandate, as well as for the office going forward into the future.

12:25 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you. I really appreciate that and I'll look forward to that analysis.

Maybe this is yet to come, but do you have somewhat of an idea of how far behind we are on technology? When we look at some of the cuts at CRA for example, we've had to invest in phone lines, let alone anything else, and that was pre-COVID. How far are we from getting caught up and then moving forward post-COVID, recognizing how important technology is? Could you give us some understanding of the technology shortfalls?

12:25 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

I don't know if I could put a year on it. Whether it would be three years or five years, I have no clue. I don't think I could put a year on that. I think what's important to note is that when it comes to technology, it's growing exponentially. We're seeing that in the financial audit world and in the performance audit world, that reliance on IT systems being able to tackle large amounts of data. All of those are very important going forward.

Disruptive technology is creating so many opportunities. Like every other federal organization, we have some legacy systems. We've started to take some measures to replace them. We need to worry not only about that and our IT security but also about upskilling our folks. It's not just the technological gaps that we have. It's also the time and the space to train our people to be comfortable, to be able to use those things.

It's hard to tell you a time frame, but it's about more than just the technology. I want to leave you with that.

12:25 p.m.

Liberal

Jennifer O'Connell Liberal Pickering—Uxbridge, ON

Thank you.

12:25 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

We turn now to Mr. Ste-Marie, who will be followed by Mr. Julian.

June 22nd, 2020 / 12:25 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Thank you, Mr. Chair.

Ms. Hogan and Mr. Hayes, good afternoon. Thank you both for being here today.

Ms. Hogan, congratulations on your appointment.

Like my fellow members, I understand your predecessor's point about the Office of the Auditor General's funding and its ability to ensure follow-up of all the response measures—a point you've reiterated today. It's certainly a challenge, so I have a related question.

You were asked to audit the programs associated with the government's response to COVID-19. What about your other program audits? The mismanagement of Phoenix comes to mind. The program isn't exactly working. Have you put that on the back burner during the COVID-19 crisis?

Does the same go for the high-speed Internet program? That's another flawed program that has fallen short of its objectives.

Basically, I'd like to know what's happening with the audits of programs not tied to COVID-19?

12:30 p.m.

Auditor General of Canada, Office of the Auditor General

Karen Hogan

When we received the requests to audit the investing in Canada plan and the COVID-19 response, other audits were under way, so we had to postpone a few. Instead of tabling them in 2020, we will be tabling them in 2021.

In addition, as you pointed out, we had to cancel or, rather, postpone certain audits to a future date to be determined. That's why we initiated a hiring process on Friday; we are trying to build our audit capacity. Obviously, that decision is not without risk, but it helps us ensure that we have the staff and auditors necessary to undertake audits other than those stemming from the motions in question.

With respect to Phoenix, we conducted a performance audit, which we follow up on yearly through our audit of the Government of Canada's consolidated financial statements. We endeavour to include our findings and the error rate in a report we submit as soon as the Public Accounts of Canada are tabled in the House of Commons. As part of the report, we provide a commentary on all our financial audits, so it may contain a follow-up on Phoenix.

Rest assured that we will continue to address the pay of public servants every year in that financial audit, which is very important work to our office.