Government Operations Committee on Nov. 7th, 2006

[Charles-Antoine St-Jean]

We must not have a single, one-size-fits-all system. I am not much in favour of that. Furthermore, having just one system for an organization as large as the Canadian government would make me a bit uncomfortable, since the government could be held hostage by a single provider.

[Richard Nadeau, Bloc, Gatineau, QC]

I see.

That being said, there must still be one that is preferred. We want to develop a system, a way of doing things, a more transparent approach, etc., where accounting is concerned, which would also be simpler to consult for anyone who wanted to take an interest in it.

How far along the road are we?

The possibility of five years was mentioned. How far are we from reaching this reality?

We have seen that Ontario has one way of doing things, as does British Columbia. Some suggestions have been made, but for the ordinary layperson, what are the major phases to be completed so that we can say, in five years—let’s hope—we will have reached our goal?

[Charles-Antoine St-Jean]

Unfortunately I only have the English version of the PricewaterhouseCoopers report here. On page 7, there is a timetable in the diagram showing the implementation of the approach. A number of elements should be changed, including the reference levels. That would be the first element. There are also other elements to put in place. This is the new way of presenting information when we speak of three-way financial statements: the statement of financial position, the statement of operations and the statement of utilization. This is what we were planning here for the second year of the pilot project. Then, from the second to the fourth year, we would work on implementation of Parts I and III of the financial statements.

So a number of things must take place sequentially. As Madam Auditor General mentioned earlier, in view of the current cycle of budgets and budget estimates, only two years will be necessary to get the machine up and running. Here you have a diagram of the major phases to be completed to reach the goal.

The whole thing should take more or less five years.

[Richard Nadeau, Bloc, Gatineau, QC]

Perhaps this is an historical question, but does the fact of using seven systems at present adapt well to the process that has been outlined?

[Charles-Antoine St-Jean]

We have seven systems. At the beginning, I think we used to have 36 or 40. So we are down to seven. Later we would probably like to bring the number down to two or three. These are all systems that can facilitate the approach.

[Richard Nadeau, Bloc, Gatineau, QC]

Right.

[Charles-Antoine St-Jean]

The approach will be facilitated by several systems.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you.

[The Chair, Liberal, Diane Marleau]

Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Thank you.

I think Mr. Alghabra asked some good questions, and I'd like to follow up on them.

What I don't understand is how amortization can be the subject of a vote, because amortization is not a choice. It happens; assets get old and die. There is nothing that, as parliamentarians, we can vote to change. So it makes sense to me that if you're going to amortize, and you're going to move to accrual accounting, you would have that booked statutorily.

The only argument against this is that some assets might amortize more quickly, because if Public Works buys a bus and the bus drives into the Ottawa River, it's gone. Is it not reasonable in those situations to leave some discretion to our officials, who come under the watchful eye of Ms. Fraser and of our Comptroller General, to accelerate amortization where exceptional circumstances warrant, and assume that other amortization is just statutory?

What are your thoughts on that?

[Charles-Antoine St-Jean]

As I said, I have been moving from models 3 and 4. I think the Auditor General has also been saying model 3 or 4 would be in the zone. I like model 3 because it gives more visibility to parliamentarians, so you make that conscious decision. I like model 4 in the sense that it will standardize and prevent—I think we used the expression—massaging the amortization number. So either way, I can live very easily.

The third model would need a bit more vigilance on the part of parliamentarians. But I'm sure the Auditor General and my office could make sure that we maintain consistency in the amortization. So I would say it's a preference at this point.

[David Moloney]

As an additional comment—not instead of the Comptroller General's comments—from the point of view of parliamentary control, Parliament may wish to allocate the tax resources available to it differently, and voting amortization does allow Parliament to essentially remove the ability of the government to continue to own an asset. So the wording of the votes would have to be crystal clear as to what not providing the amortization means, but governments can dispose of assets.

Part of the question here is, does Parliament wish to have the ability to essentially force this by not voting automatically for amortization, as you said? It's this point, in terms of expenditure management and oversight, that we want to have.

[The Chair, Liberal, Diane Marleau]

Yes, Madam Fraser.

[Sheila Fraser]

I'll approach this perhaps from a different perspective.

Currently parliamentarians vote on operating expenditures as one number. Going forward, were this to be adopted, you have operating expenditures that would be cash, most of the program expenditures going out would be cash, and then you would have non-cash expenditures, of which amortization would be one. But also if you take the case of provisions for environmental liabilities, those would be non-cash.

Now, you could almost see a world where you might have a mix in how non-cash expenditures were dealt with. Regarding the amortization of fixed assets, you might say yes, that's statutory; we've voted on the acquisition of the assets, and that just follows through. But on an environmental liability, parliamentarians might want to say no, we just don't want to be informed of that; we want to actually vote on it.

So I think the models are not necessarily exclusive, one of the other. Depending on the nature of the expense, you might say that there are some we accept, because we've voted on them previously and the amortization follows as the consequence, whereas others, environmental liabilities, provisions for lawsuits, and so on—

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Things that are actually within our control.

[Sheila Fraser]

Yes, that's right—that parliamentarians could actually decide, no, we don't agree with this or that decision.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Right.

[Sheila Fraser]

Then you might say no, those we want to vote on.

So you can almost think of a mixed model, in a way.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

I think where we differentiate between the two is that one is in our control and the other is not. For example, if Public Works buys this bus—which I've talked about earlier—and presumably it doesn't drive into the Ottawa River, the bus is going to last 10 or 20 years, or however long a bus lasts. Parliament can't vote to give it an extension of life.

[Sheila Fraser]

No, that's right.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

So why would we vote on it? You can't say, actually, no, we decided today that it has not amortized by $50,000, that it did not occur this year, and we think the bus is in pretty good shape after all. It just amortizes. It just happens.

You pointed to situations where we actually have some control. I think we need to find a solution that fixes statutorily amortization that is inevitable into a schedule that's realistic, with provisions for our officials to accelerate that amortization where extraordinary circumstances necessitate them to do so. Then in a separate category we'd have those matters that actually are within our control.

I don't know if I've fallen into model 3 or 4 here.

[A voice]

Maybe 3.5.

[Poilievre]

Great, 3.5.

I'll open up the floor to any comments you might have on that. Then I think Mr. Warkentin as well has some questions.

[David Moloney]

Let me just very briefly respond.

I guess the issue is whether Parliament would like to have the ability to decide that the bus should be sold--not whether a coat of paint has extended the life but whether the government shouldn't have that bus, should sell it, or we should not be changing them. So the balance sheet of the country should change.

If you vote the cash, you are voting for the amount that affects the government's balance sheet. If you don't vote the amortization, Parliament is not ever voting for the amounts that eventually affect the bottom line, in that sense. You're only voting the cash, not the actual fiscal consequence.

If we're clear enough about it, it's not...and that's the issue of the transparency. I'm not saying it's not doable, but you don't have that further level of control on an ongoing basis.

[The Chair, Liberal, Diane Marleau]

But don't you think a government has the right, when they're in power, to make a decision to say, for instance, we're thinking of selling off the Parliament Buildings? They may not be able to sell them, of course, but they could make that decision and the consequences would follow, period.

I think the government always has that power. Parliament has the power to approve the expenditures and the amortization. If they have numbers enough in the opposition, they can say, no, we don't want you to sell Parliament. But that comes as a separate thing to Parliament.