Government Operations Committee on Nov. 7th, 2006

[Sheila Fraser]

I'm sure the Comptroller General can address this much better than I can, but I would say most definitely it will cost more. I don't think we should think this is going to cost less. I think it would be a mistake to think it will cost less, because it'll mean that we're not putting in the resources required to do it well. But there's—

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

Not just in the transition, but in the long term.

[Sheila Fraser]

I mean going forward. There may be some savings, but quite frankly I wouldn't count on the savings too much. I think we have to recognize that there will be costs involved in this.

But if we look at just the financial reporting side, there were significant costs to put in new systems to train people, to develop new policies on that. But now there is information about capital assets, accounts receivable, and very large sums of money that essentially weren't being really managed well before.

So it's a cost, yes, but there is better information and better information for managing what are at times very large sums of money.

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

Hopefully if we are spending that money in understanding the decisions we're making, we'll make better decisions, which will save us money.

[Sheila Fraser]

Ultimately this will save money, yes.

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

Thank you very much.

[The Chair, Liberal, Diane Marleau]

Thank you.

We'll go to Mr. Alghabra.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Thank you, Madam Chair.

Good afternoon to all of you. It's good to see you again.

I'm going to start with three simple questions to the officials from the department, the Comptroller General, and Mr. Moloney.

To be accurate, do you agree that accrual accounting will improve accountability?

[Charles-Antoine St-Jean]

Yes.

[David Moloney]

If done properly, yes.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Do you agree that it'll improve transparency?

[Charles-Antoine St-Jean]

Yes.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

I'm sorry, I just want to make sure. It may seem silly, but it—

[Charles-Antoine St-Jean]

I don't mind it being on the record, yes.

[David Moloney]

Again if done properly, yes.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Do you agree that it improves management of our assets and financial expenditures?

[Charles-Antoine St-Jean]

Of course. Yes.

[David Moloney]

Same again.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

I'm going to assume that Madam Fraser also agrees with this.

[Sheila Fraser]

I most certainly do.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

All right. That's good.

I think we have to come to terms with the fact that we need to move that way. The question is how do we do it and the best way of doing it.

I have questions about model 3, the double voting, and model 4, the statutory and voted appropriation. Could you perhaps elaborate on each of those a little? Tell us exactly what they are and what the issues are with each of them.

[David Moloney]

With respect to model 3, today we bring the main estimates, and the supply bill comes forward. Within each department there is a long series of votes, some of which are capital votes. With any entity that has more than $5 million of capital expenditures, there is a capital vote. What this would mean is that, instead, we would have two kinds of capital votes. There would continue to be, as there is today, an expenditure capital vote. Under model 3, there would also be a capital vote in respect of the amortization on the assets that exist on that entity's book. Departments would be voting twice on capital assets, existing and new, obviously with a different timeframe in terms of moneys to be spent and moneys that have already been spent and are essentially providing services--capital assets providing services.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Sorry. So we would have to vote on the acquisition of that asset and on the consumption of that asset.

[David Moloney]

That's right.

Looking at slide 7, which was the graphical representation of pulling the four.... If this was the only thing the department was doing and the only asset in question, there would be a vote for the $25 million, a vote for the $75 million, and then, in year three, votes for the $10 million. Of course, for most departments there would be a variety of assets purchased. You might be voting for the $75 million in year two to complete the purchase of this equipment, but Parliament might also be voting, for the sake of argument, $10 million, which is the amortization expense in respect of a piece of machinery that had been purchased, let's say, five years before.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Would we vote in year one on all of these? Would we vote on the $25 million, the $75 million, and the $10 million-per-year consumption in the year of acquisition of that asset? Or will we vote in year, one only on $25 million, and then, in year two, on $75 million, etc.?