Government Operations Committee on March 28th, 2012

[The Chair, NDP, Pat Martin]

Yes, exactly, to merge. We're given a couple of days to examine the estimates, and they're deemed to be adopted if we don't get the time to examine them properly. So in some of the recommendations we've heard that committees need a reasonable length of time to truly give the estimates a going-over. Maybe I didn't put it clearly in my opening remarks, but how do you feel about that, then, just your personal view?

[Michael Ferguson]

Thank you for the clarification. I think I understand better.

Instead of moving the fiscal year-end, the same thing could be accomplished by saying that the budget needs to come out in December or in January or whenever, right?

As I said, the capital budget in New Brunswick was always done in December. The operating account budget we did at least once in December. It had some good points and some bad points.

The other thing that would happen in New Brunswick.... They brought down their budget, for example, yesterday, and they would now be going through the committee of supply process to approve it. What they would do is set aside a number of hours--and I don't remember exactly how many hours--for the committee of supply to consider the main estimates. It was a significant number of hours, though.

The committee would call in the ministers for the departments they wanted to review, and it would be up to the committee to decide which departments they wanted to review. They would call them in, and they would go through asking the minister many questions about that. By the time the final vote was taken on the main estimates, it was probably into early June before the final vote was taken. So again, that's just what happened in New Brunswick.

[The Chair, NDP, Pat Martin]

That's very interesting. Thank you, Mr. Ferguson.

For the NDP, Denis Blanchette. Go ahead.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you, Mr. Chair.

I would also like to thank Mr. Ferguson for being with us today.

I started to cut and paste some parts of your presentation. In a nutshell, you are saying that the main estimates are becoming less meaningful because they don't show the complete picture of planned spending and aren't linked to the budget.

Do you think the estimates process is still useful? Does it still have any value? Is it a waste of time and energy? If so, do you have suggestions on how to fix it?

[Michael Ferguson]

Again, we have made the recommendation that the main estimates should be on the same basis, an accrual basis, as the budget and the financial statements.

We have also made the comment that when you can't make the reconciliation between the main estimates and the budget, it makes it difficult to understand what's in the main estimates and what's not. I think we are very much on record as recommending that the way to deal with it is to move to accrual budgeting and figure out how to bring those main estimates in line with the budget and the actuals.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Okay.

Even if we do that, we get an additional budget presented to us very quickly, containing new measures. It is what they call the Supplementary Estimates (A).

Do you think we should continue with this process, that is having estimates, then the budget speech and, soon after that, the Supplementary Estimates (A)? Do you think it is a good process? Should we not be looking at other ways?

[Michael Ferguson]

I'll go back to my experience in New Brunswick. The main estimates would have agreed with the budget, so when the budget was brought down there was a main estimates document that tied in exactly to the budget. Subsequent to that, during the year it would be possible that there would have been a supplementary estimate brought down, but it would be very clear to everybody that the supplementary estimate would be spending that is outside the original government's budget plan. It was very clear at the provincial level that what a supplementary estimate represented was spending that the government hadn't foreseen or hadn't predicted at the time they brought their budget down.

That's what I'm used to in terms of supplementary estimates.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you very much.

You are at the end of the accounting cycle with auditing. Of course, the entire financial cycle is important. Aside from the type of accounting, do you have recommendations for the committee on the overall financial cycle, in particular regarding budget estimates?

How should we reorganize things, to be able to better understand what is there, to see how we could better assess spending and allow members to better understand estimates and what they mean, to be able to have a better idea of the results at the end of the process?

[Michael Ferguson]

I'm sorry to keep sounding like an accountant, but I am one, after all.

I think fundamentally the starting point has to be an agreement, as I said earlier, on how you define the entity—so what the government is—and then how you account for things. On those two things there are recommendations by the Public Sector Accounting Board on how that's done, and the federal government follows those recommendations in preparing its actual financial statements.

In order to be able to compare actual performance with budgeted or predicted performance, it's therefore important that all of the budget documents, including the estimates, be prepared on the same basis. That's the only way at the end that you will be able to know whether the government met its plan or not. So it's about making sure those are lined up.

The other thing that's important in terms of the whole appropriations process—again, I'm not exactly sure how you do this at the federal level—is to make sure that what is being voted on is clear. If there's an amount being voted, it needs to be clear to Parliament what it is actually voting that money for and what it's to be used for. That would be the other side of it.

[The Chair, NDP, Pat Martin]

Thank you, Denis.

Thank you, Mr. Ferguson.

For the Conservatives, Kelly Block.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

I would like to welcome you to our committee, and offer you my congratulations as well on your appointment last November 28.

As we have moved through this study, what has become clear to me is that this is a very complex process. Recognizing that you have only been in the position you're in for four months, I am very interested in your experience in New Brunswick. I want to refer to that experience and ask if there are any estimates practices used in New Brunswick or that you were aware of, perhaps even in other provinces, that you would consider useful at the federal level.

[Michael Ferguson]

I think I can mention some of the things that I felt were good practices in New Brunswick, and that should at least be considered at the federal level. I'm not sure whether they could actually be adopted.

Despite the fact that the budget was broken down into many different types of categories—and at the federal level we have things like grants and contributions and capital and all kinds of different categories—we always had a reconciliation between that breakdown and the expenses in the budget. That way you could always drill down enough to learn how much money a department was getting to spend, and how this would tie into the overall budget amount.

Another thing that New Brunswick was working on over the last few years was making sure that any tax expenditures were showing up on the spending side of the ledger, rather than the revenue side of the ledger. Governments sometimes put in place programs whereby people can access funding through the tax system. Therefore, they treat it as a reduction of revenue instead of a spending item. So we were working towards identifying those items and making sure they were on the spending side.

At the provincial level, I think doing a capital budget in December was a best practice just because of the need to get the construction started as early in the construction season as possible. I don't know how that relates to the federal government's world, but I think it was a best practice.

There was also accrual and making sure that everything was on the same basis, as well as the fact that the committee of supply went through a number of debates and asked a number of questions. The downside was that departments never knew what questions were coming, and they had to prepare binders and binders of material to try to prepare for every conceivable question that might come up in the estimates process. At least there were many hours set aside for questions.

So those would be some of them.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

An observation has been made that another big challenge is the huge volume of information that the estimates contain. Still another has to do with the various objectives we're trying to achieve through the estimates. I'm wondering if you would like to comment on that. I know you said you haven't really done an audit of the estimates process. But based on your experience, do you think it's similar to what happens at the provincial level? What would you see needing to be changed to manage the volume of information that one has to wade through?

[Michael Ferguson]

There were those challenges, even in a smaller province. For example, at the provincial level the hospitals in New Brunswick were fully consolidated in the province's financial statements. In the main estimates document, there would have been one line for grants to hospitals, which in comparison to the province's total budget would have been a very large number, but the only thing it would have said would have been “grants to hospitals”. So it wouldn't have given members of the legislature any information about the types of services or any of that. Mind you, they would have had the opportunity to ask those types of questions at the committee of supply. You can put only so much detail in a main estimates document, and we had that problem even in our small jurisdiction.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you.

[The Chair, NDP, Pat Martin]

That's it for your time, Kelly. Thank you.

Mathieu Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

The OAG had made the following recommendation to the Treasury Board of Canada Secretariat:

The Treasury Board of Canada Secretariat should review the practices for determining the information that is presented to Parliament in the Estimates. It should amend its processes so that when Parliament approves funds, it is presented with clear and accurate information about how the funds will be used.

The Treasury Board of Canada Secretariat accepted that recommendation. I was wondering if your office has followed up on it.

[Michael Ferguson]

I'm sorry, were you referring to a recommendation we made? Yes? Okay. Which recommendation?

[Mathieu Ravignat, NDP, Pontiac, QC]

It is recommendation 2.15.

[Michael Ferguson]

In....

[Mathieu Ravignat, NDP, Pontiac, QC]

It was in 2011.

[Michael Ferguson]

Oh, okay.

Again, we stand behind that recommendation—

[Mathieu Ravignat, NDP, Pontiac, QC]

Has the recommendation been implemented? Have you followed up on it?

[Michael Ferguson]

No, we haven't followed up on it at this point, simply because it's too soon in terms of when we actually issued that recommendation. But we will be following up on it.

[Mathieu Ravignat, NDP, Pontiac, QC]

Okay, thank you for the confirmation.

In addition, federal ministers and organizations also prepare other unaudited financial information, such as quarterly financial reports and future-oriented financial statements.

I would like to have your opinion. How much should this other unaudited financial information, such as financial reports and future-oriented financial statements, be studied and scrutinized independently? Should this information be reviewed by parliamentary committees in your opinion?