Government Operations Committee on May 29th, 2020

[Karen Hogan]

Being able to put a number to it is something that I am not able to do right now. We had a budget request that was submitted in the past that was looking for funding. I have begun preliminarily to look at that so that we can see whether we could update it, whether it needs updating and what adequate funding might be going forward.

Obviously, diverting a significant amount of our auditors to the two large audits of the Investing in Canada program and COVID-19 is going to take a sizable amount of our workforce. We still have some auditors who are doing performance work that's ongoing, but a good chunk of our auditors are going to be looking at these two audits, so if we want to increase our capacity, then we need to get more funding. I don't have the exact number, but I'm definitely looking at it.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Given the way we communicate these days, with social distancing and so forth, that may also have a toll on your budget in general and your effectiveness to do the audit in a proper and normal way. To be specific, on a percentage basis, how much of an increase in funds do you think you would need to operate properly, given the new reality that we're facing?

[Karen Hogan]

Again, any number I might give you would probably be a shot in the dark.

I think when we talk about the new reality that we're going through, it impacts the funding in two ways. I see an increase, given the fact that we do anticipate certain delays and difficulties in connecting with the departments that we audit and for individuals to gain access to the information that we might need. I also see an opportunity for us to find ways to be perhaps a little more effective and a little more efficient. It is early days, and I think everyone is still trying to adapt and figure that out.

It would be hard to put a percentage out there. We need to look at both sides of the coin before we know exactly what the right level might be.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

There are also many questions that remain to be answered on the timing and effectiveness of the government's response to COVID-19, especially with regard to recommendations on using personal protective equipment and measures to prevent the COVID-19 virus coming into Canada.

Will your office be looking into investigating the effectiveness of the Government of Canada on the pandemic measures?

[The Chair, Conservative, Tom Lukiwski]

Madam Hogan, we're completely out of time. If you could provide the answer to Mr. Aboultaif's question in writing to our clerk as soon as possible, I would appreciate that.

We'll now go to Mr. MacKinnon for five minutes, please.

[Steven MacKinnon, Liberal, Gatineau, QC]

Good afternoon, Ms. Hogan.

I want to thank you and your staff for joining us. I want to congratulate you on your appointment, which is to your credit.

I see that the House of Commons' initial motion, which suspended our regular business, calls for your office to conduct an audit of all the measures taken by the government. In very general terms, can you explain what the House's request means and what it entails for the Office of the Auditor General of Canada?

[Karen Hogan]

The motion passed by the House of Commons calls for us to look at all the measures taken by the government, whether they involve money injected into the market or contracts awarded. This is related to health and safety. There are also the specific measures taken by the government.

I believe that the request is very broad. We now need to determine the scope of the response and where we'll have the best impact and the most significant value added for the government and for Canadians.

[Steven MacKinnon, Liberal, Gatineau, QC]

Where do you think that you should start? When is the best time to start? There are many programs and they have different objectives. How do you start this work? How do you determine when the work will be done?

Tell us a bit about the methodology that you plan to use.

[Karen Hogan]

When it comes to COVID-19, we're all wondering where to start. There's an incredible number of topics and aspects that we could look at. It's really a matter of establishing the criteria and the priorities to determine where we can have a slightly more immediate impact, so that it will be easier to make changes in the event of a second wave of COVID-19.

We're reviewing our approach to audits, and even the way that we report on them. We want to see whether we can ensure that the parliamentarians and the government receive information more quickly. Our goal is to avoid being presented with faits accomplis and commenting too late.

[Steven MacKinnon, Liberal, Gatineau, QC]

You admit, or you can see, that the timing issue is crucial for determining whether a program has achieved its objectives.

Are you conducting a counterfactual study? Let me explain. Are you looking at the potential impact of not having a program? For example, what could be the consequences of not having an emergency benefit in place?

[Karen Hogan]

It isn't part of our mandate to comment on decisions made by the government or on a policy implemented by the government.

Obviously, we'll look at whether the objective of a program such as a benefit had the expected effect. The program may lead to a shortcoming. However, when we start auditing a program, our goal is to identify the objective of the program and to see whether that objective is being achieved effectively and efficiently.

[Steven MacKinnon, Liberal, Gatineau, QC]

What role does context play in planning an audit? Are you taking into account the urgency of the situation? Normally, major programs involve several years of planning and discussion. However, we're talking about an emergency program here.

Do you take into account the importance of context in implementing this type of measure?

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, we're completely out of time, but I would encourage you to give a written response to Mr. MacKinnon's question. If you could submit it to our clerk as quickly as possible, I would appreciate that.

We'll now go to Mr. McCauley for five minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks very much and, like everyone else, I congratulation you on your appointment.

I have a question regarding unfunded pension liabilities. Do you support the move to a bond yield-based calculation of the liabilities of unfunded plans of the public service pensions?

[Karen Hogan]

Pension accounting is a very interesting and complex area. I think it's probably only accountants who get excited about pension accounting, and perhaps actuaries.

[Kelly McCauley, Conservative, Edmonton West, AB]

Believe it or not, I get excited by how I think we're doing and how we're recording our unfunded liabilities.

[Karen Hogan]

As you then appreciate, accounting for a pension liability includes so many different factors, so many assumptions—

[Kelly McCauley, Conservative, Edmonton West, AB]

Right. I've long disagreed with how we measure our discount rates, though. I'm just wondering if you support a move to a bond yield-based calculation of the liabilities.

[Karen Hogan]

I was very much involved in the changes that were made several years ago, and in fact they had been changes that I had pushed for over several years. I believe that any time a change is made that results in a better valuation, that allows—

[Kelly McCauley, Conservative, Edmonton West, AB]

Then you support the move to a bond yield-based calculation?

[Karen Hogan]

I support the move the government has now made because I believe it does result in a much better measure of a very long-term liability.

[Kelly McCauley, Conservative, Edmonton West, AB]

Right, and based on the same logic, should that apply then to the identical liabilities of the funded plans?

[Karen Hogan]

There's a big debate, I believe, going on in the accounting standard-setting world right now—

[Kelly McCauley, Conservative, Edmonton West, AB]

Right, and the reason I brought this up is that unfortunately your predecessor, Mr. Ferguson, had committed to following what the PSAB had come out with. Unfortunately, they've delayed their announcement or delayed their report, which kind of leaves things in the air. I'm wondering if you would apply the same logic to the funded plans for the discount rates.

[Karen Hogan]

There are merits on both sides. Right now applying what public sector accounting standards has set out as acceptable ways to measure funded and unfunded pension plans is, in my opinion, the best way to go.

Standards have been set by an independent body. They encourage comparability and transparency. The standard-setters, I hope, will revive that work, that task force, at some point, given that pensions are very important to so many layers of government.