Evidence of meeting #28 for Government Operations and Estimates in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was way.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

David Macdonald  Senior Economist, Canadian Centre for Policy Alternatives
Joe Jordan  Senior Consultant, The Capital Hill Group

4:10 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Thank you, Mr. Chair, and thank you, Mr. Macdonald, for being with us today.

I think that the mandate for this study is quite clear and simple: to help members of Parliament better scrutinize government expenditures, whether they are increases or decreases. It would seem to me logical that we would want more information, and better displayed, rather than less.

You referred to this apparent turnaround in Treasury Board when they first explicitly stated that cuts included in the budget were to be included in the May documents and then countermanded that statement and said cuts were not to be included in those May documents.

I also made the point that when we were in government, we had a similar exercise in 2005, and every single program reduction in every single department was included in the budget, so that would have been even earlier than the May document.

I'm not sure this is within your realm of expertise, but based on what you know about government accounting and the way governments act—I can't imagine that the technology has regressed between 2005 and 2012—could there be some reason that the government is unable to produce this information, or do we conclude that if they don't produce it, it's simply because they don't want to?

4:10 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

I certainly don't think that there has been a technological regression. A much smaller level of government is the City of Ottawa; its council is a good example of a government producing budgets with a lot more detail than what we find at the federal level. I think there is plenty of work that can be done in terms of making these documents more transparent.

This was my third recommendation: that when major policy changes are introduced, whether those are cuts or increases in programs, those large amounts in those policy changes should be made public to parliamentarians and to Canadians so that they have a good idea of what's happening.

One of the reasons this “The Cuts Behind the Curtain” document was published in the first place was that those estimates aren't available.

4:10 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

I might be missing a point, but I would have thought that for a committee doing a study on improving information, these would be more or less motherhood recommendations that you were making. Why would we not want better information in the RPPs for the three previous years and the three future years, including information on employment? I can't see why anybody would object to that.

That was, I believe, your first recommendation, which makes a whole lot of sense to me. Do you think it would be difficult for the government to produce this additional information that you're recommending? Do you think it would require a whole lot more staff in government to do this, or would it be relatively simple? Perhaps you don't know.

4:15 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

I'm not an expert on the government accounting systems. Maybe that's part of the problem. Maybe it's all being filed away on paper somewhere. I think what is clear is that this amount of detail, and much more detail, is routinely available for much smaller organizations, whether it's private sector or public sector at other levels of government.

It's not clear to me why it shouldn't or couldn't be made available to parliamentarians. It certainly is my hope that ministers at the top of these departments are seeing much more detail than parliamentarians are seeing. Otherwise, there is a really serious oversight problem in terms of trying to figure out how this money is spent.

4:15 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Do I have time for one—

4:15 p.m.

NDP

The Chair NDP Pat Martin

You have one and a half minutes.

4:15 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Okay. You've briefly mentioned the question of accrual versus cash accounting. We've heard different opinions on that. Do you have a view as to whether the status quo is good, or whether we should try to move everything to accrual? What should we do in order to best understand what's truly going on?

4:15 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

I think that the accrual system is the appropriate one at the federal level.

The main estimates are still in cash, and it makes sense that they be in cash in the sense that the government is authorizing a certain amount of money to be spent. I think what is missing from this equation is a reconciliation between the cash and the accrual from the main estimates so that you could see those main estimates on an accrual basis as well as see them on a cash basis. I think that most of the federal government expenditures are not on a capital basis, except at PWGSC or DND—they're heavily involved in capital projects—and a lot of it, even if it's infrastructure, is transferred to the provinces and municipalities. They're the ones who make those investments and therefore accrue it.

In certain departments it would make a much bigger difference than in others, for sure.

4:15 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

If I understand you correctly, you're basically saying we should keep the estimates status quo—as they are—but provide additional information to reconcile those cash numbers to accrual numbers. Am I right?

4:15 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

Yes, that's right.

4:15 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Thank you.

4:15 p.m.

NDP

The Chair NDP Pat Martin

Your time is up, John. Thank you very much.

For the Conservatives, we have Bernard Trottier.

You have five minutes, Bernard.

4:15 p.m.

Conservative

Bernard Trottier Conservative Etobicoke—Lakeshore, ON

Thank you, Mr. Chair.

Thank you for coming in today.

We're still in the early stages of this study. Some of us are struggling with just trying to identify what the problem really is. It's always interesting and tempting to jump right into coming up with solutions, but we want to get a better understanding of the problem as part of our solution. Also, we're going to be talking to witnesses from other Westminster parliaments that have struggled with a similar issue. The U.K., Australia, and New Zealand are examples.

I think we're in agreement across all of the House of Commons that we want better accountability and better transparency when it comes to spending. What is the structural impediment that prevents the Government of Canada from providing this information? It's not really for parliamentarians; it's really for the people of Canada. They need to be able to see this to know where their tax dollars are going.

Big organizations such as RBC, as you mentioned, or city governments are able to do this. What is it with the Government of Canada? We had some officials in to give us a briefing a couple of weeks ago. They showed us an estimates book from the 1880s. The estimates looked very similar to what they look like today. What's the problem? Why can't we provide the level of detail that Canadian taxpayers and Canadian stakeholders need to see?

4:15 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

I'm not sure I'm equipped to answer the question. It may well be institutional momentum: this is the way the reports have always been done, so this is the way they should be done today. Maybe it's going to require a shakeup from this committee, with the input of experts, saying that this is the format you want these reports to come in and that you want them provided in that format.

There are vast computer systems that track all kinds of expenditures, down to the penny level, for these departments. The question is, what do you want these computer systems to output to be useful for parliamentarians?

I don't know the history of why the estimates are the way they are, but you're certainly right in pointing out that you get much more information in most levels of government and in private industry, even publicly, than parliamentarians or Canadians appear to be getting about the federal government.

4:15 p.m.

Conservative

Bernard Trottier Conservative Etobicoke—Lakeshore, ON

Part of the answer that the officials gave us is that it was a lack of systems and technology. Surely in 2012 we can make some progress in that regard. There didn't seem to be a lack of desire to move to a better future when it came to transparency and accountability.

I want to talk about the process, though. Let's say that someday we do get to a point where we have better transparency and accountability. In a perfect world, you'd have estimates; then at some point there'd be revised estimates, which are expenditures up to a certain amount, which may revise up or down, and then actuals.

There are always some challenges with the lag on the actuals. We've studied this a little bit, but can you think about that cycle, that annual or even multi-year cycle? Is there something that you've identified in your studies that you could change to actually get better alignment between the estimates, the revised estimates, and the actuals? Anybody running an organization has to deal with these kinds of things. Can you comment on that, perhaps in terms of introducing a budget at a different time or compressing the reporting cycle?

4:20 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

It's a challenge, I'm sure, for all sorts of organizations and at all levels of government. They'll pass a budget, but those implementations won't happen for a quarter, and so on, so they float it over that quarter and assume that expenditures are going to be the same.

I don't think this is necessarily a challenge of computational need. These estimates could be put out if you wanted, if parliamentarians demanded they be put out in a particular way and held the bureaucracy to the fire. The example of CIDA not putting out all the full numbers for 2011 should not be acceptable, and they should not be allowed to do that. Someone should come down there, slap some wrists, and make sure it's done correctly.

There are always challenges in terms of timing, but it would certainly be helpful if the 2011-2012 RPPs and main estimates were in accordance with the federal budget. Currently they're not; they're a year off, essentially. As well, it would be helpful if there were a reconciliation at the end of every year to explain what was changed over the course of the year and why it was changed.

It seems so simple, and it's regularly available at a given level of government. It's simply not in one place at the federal level.

4:20 p.m.

Conservative

Bernard Trottier Conservative Etobicoke—Lakeshore, ON

Do I still have time, Mr. Chair?

4:20 p.m.

NDP

The Chair NDP Pat Martin

You have one minute.

4:20 p.m.

Conservative

Bernard Trottier Conservative Etobicoke—Lakeshore, ON

Ultimately, when you're running an organization or a department, you have to be able to explain variances. You alluded to that in your comment and said that whenever there are variances, some kind of explanation should be mandatory.

Sometimes when it comes to explaining variances, there's some very evasive language. What are some specific things we can do to identify a variance and hold people to account, if there is a significant variance between what they planned to spend and what they did spend?

4:20 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

It's difficult to say what process could be employed. First of all, if you don't have the information that variances are happening, there's nothing you can do about it, right? The estimates come in; then you have supplementary estimates, and there's some detail in there and some detail in the quarterly departmental reports, but if you wanted to put an aggregate picture together from purely those reports, I think you would be really challenged to do so. Frankly, it would be very difficult, and parliamentarians shouldn't have to work that hard.

If anything, there are too many reports that all go off in every different direction. They're produced at different times, probably by different portions of the department; they end up providing different estimates of what's going on, and they don't agree. This is not an argument for less information. I would argue that more of this information should be compiled in one place so that it all agrees and everybody's on the same page, because if page 1 says you spent $1 billion and page 2 says it was $100 million, then obviously there's a problem. They would be much more likely to be reconciled if the RPP was beefed up, for instance, and looked forward as well as backward and included everything in one large annual report. I think that would make it a lot easier to do a line analysis of a project if you were interested.

4:20 p.m.

NDP

The Chair NDP Pat Martin

Thank you, Bernard. You're well over our time for that.

We have time for at least one round left.

4:20 p.m.

Conservative

Mike Wallace Conservative Burlington, ON

Do you mean one round or one person?

4:20 p.m.

NDP

The Chair NDP Pat Martin

I'm sorry; it's one person, and possibly a partial switchover. Let's see where this goes.

Next is Denis Blanchette, for the NDP. You have five minutes.

4:20 p.m.

NDP

Denis Blanchette NDP Louis-Hébert, QC

Thank you, Mr. Chair.

I have been listening to these questions and answers for a while. The questions are about transparency, accountability requirements, reports. But we want a better understanding of the budgeting cycle; we want to see figures and to be able to compare them.

Could you tell us whether, with the benefit of your expertise, by wanting to start with a definition of the way in which budgets are evaluated, we are going about things in the right way? Would it not be preferable to start from the other end, to ask ourselves what we want, which reports we want, and then to see how it all relates? Do you understand what I mean? What is your opinion?

4:20 p.m.

Senior Economist, Canadian Centre for Policy Alternatives

David Macdonald

I think there are good reports that the government publishes. They are bare bones, to be sure, but they could be the foundation of much better reporting. I'm not sure that we should necessarily throw out the process. I think that the report on plans and priorities, for instance, is a good foundational document that could be built out to become much more than it is.

I would argue more for consolidation of the reports that currently exist to, say, one major annual report, which would be the RPPs, for instance, plus some quarterly reporting that ends up in the annual report, in addition to a beefed-up main estimate document. I think the foundations are in place and it's an issue of defining for the bureaucracy what parliamentarians and Canadians want to see out of these reports and what kind of detail they want to see.

I think there's a discussion that could be had with this committee later on, and I would love to see a draft of what these new documents could and should look like. I think you would get a lot of expert advice if you stipulated the template you want to see and how you want this reporting to happen and then looked for comments on a particular new type of document, such as an expanded RPP or a better main estimates document. I think you would get a lot of very good advice on that.