Government Operations Committee on March 28th, 2012

[The Chair, NDP, Pat Martin]

Okay, thank you, John.

The last person in this round, and I believe it would be the last questioner of the day, unless I hear strong feelings otherwise, is Mike Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

I want to thank you for coming today.

Mr. Ferguson, I don't want to say you have big shoes, but you have important shoes to fill. I know that it's a learning curve for you to come here.

Part of the process at this committee is to look at what other provinces are doing, so I thought it was excellent that someone with your experience would come here. Now we know a little bit about the New Brunswick experience.

Just so I'm absolutely clear, as the Auditor General, or the auditor's office, the date of our fiscal year-end is not an important issue for you—whether it's April 1 or whether it's June 1—as long as we have one, of course. The actual date the Government of Canada chooses is not an important issue to you as the auditor. Would that be an accurate statement?

[Michael Ferguson]

That would be an accurate statement.

[Mike Wallace, Conservative, Burlington, ON]

Okay.

The other thing is that I've put forward about eight recommendations I've had in my mind about things to do and improve. I don't know if I've given them to the committee yet.

Based on your experience and what you've said today on New Brunswick, right now estimates—mains or supplementaries—are technically to be reviewed by committee. If they're not reviewed by a certain date, they're deemed approved by that committee. Does that deemed rule apply in New Brunswick, or do all estimates automatically go to that supply committee?

[Michael Ferguson]

I'm at risk of not understanding all of the technical parliamentary rules, I guess, in New Brunswick, but certainly my understanding is that the whole estimates would be referred to the committee of supply. The committee of supply would have a certain number of hours, and it would be a substantial number of hours, for deliberation. They would call the departments forward.

[Mike Wallace, Conservative, Burlington, ON]

Basically, you're telling me that one committee looks after it all. I know that it's a much smaller number than we have here. One committee looks after it all, reviews the estimates, and reports back to the New Brunswick house, approving or disapproving or whatever. That's very interesting to me.

Do you know if there was a position in the New Brunswick house responsible for actually training members of the provincial house on the books and how things operate from a financial perspective? Was there a certain group responsible for that? Did it happen or did it not happen?

[Michael Ferguson]

I don't know of any formal process for the way it happened, no.

[Mike Wallace, Conservative, Burlington, ON]

Okay.

Your office, as you've highlighted, gives us a little booklet when you join. Now, I've been here six years and have spent a lot of time looking at this stuff, but not everybody has. One of my recommendations is that we need to be better trained, as individuals, to understand what we're looking at.

With your accounting hat on, would you say that it's easier for those who are not in the financial area to understand cash over accrual? Is it not an easier concept to understand? Regardless of how long the asset's going to last and when the actual acquisition takes place, it's just easier to understand that we have to put away the cash for it, and we're spending it this year, even though it may have a longer lifetime and we may acquire it over time.

What's your view of being able to train MPs, who come from all different backgrounds, on accrual over cash? Or do you think it doesn't really matter?

[Michael Ferguson]

I think you're right that, in general, people understand cash. I think it's very important, though, when you're dealing with an organization like the federal government that decision-makers understand where there are risks if you just focus on cash. The big one that comes to mind is the pension expense and pension liability, which is very much based on understanding what the value of the pension promise is, because it goes into the future, and then understanding how much cash you have to set aside for that.

So one area where you can have a significant difference in expense is on pensions, and it's very important to understand that difference between the accrual expense and the cash that's getting paid out. So cash may be simple, but there are certainly areas where you have to be very careful with understanding the accrual.

[Mike Wallace, Conservative, Burlington, ON]

May I ask one more question?

[The Chair, NDP, Pat Martin]

You sure may.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair. This is my final question.

We really don't have a separate capital budget and a separate operating budget; it's all lumped into one, and that's a different discussion altogether. But you did mention that in New Brunswick one budget was ahead of their fiscal timeframe when it started to take place and you said there were positives and negatives. Can you give me one negative that you can remember from your days in New Brunswick of having that budget presented earlier, prior to the fiscal date? With having that space, what was the negative?

[Michael Ferguson]

I think the negatives were again primarily trying to understand...because you're trying to put a budget together for April 1 on, right?

[Mike Wallace, Conservative, Burlington, ON]

Right.

[Michael Ferguson]

And you're three to four months in advance of that, so you have to make some assumptions about what's going to happen in that three or four months in order that you know what your starting point is going to be the next year.

So I think it's just trying to understand that, what's going to happen to the economy in those three or four months and what's going to happen in the stock market that will affect pension expense and that type of thing.

[Mike Wallace, Conservative, Burlington, ON]

Because you're making those estimates on a 12-month basis anyway, you're just adding three to four months to that estimate then?

[Michael Ferguson]

It's adding some uncertainty to it, yes.

[Mike Wallace, Conservative, Burlington, ON]

Okay, thank you, sir, and thank you very much for coming.

Thank you, Mr. Chair.

[The Chair, NDP, Pat Martin]

Thank you, Mike.

I believe that does conclude our second round of questioning. I think the members are satisfied that they've asked you all they needed to ask you, Mr. Ferguson. So we thank you for attending today. Your testimony was very helpful and very useful, and we will fold that into the mix as we continue our studies on the examination of estimates.

Thank you for attending, sir.

[Michael Ferguson]

Thank you.

[The Chair, NDP, Pat Martin]

The meeting is adjourned.