Government Operations Committee on Dec. 2nd, 2020

[Yves Giroux]

That's a complex question, so I will do my best to answer using the numbers I have to date.

In the case where the government first leases the ships and later decides to purchase them, the sooner it purchases them, the better it is cost-wise, of course.

I think you're asking me the point at which the price would be more or less equal to the purchase price, $633 million. You suggested that it would be after about 15 years. That seems to be the right point for the purchase of the Asterix and Obelix, especially considering that the fixed rate is estimated to be $40 million annually if the contract is extended, which is highly likely. Under the lease contract, the government basically has to pay $100 million a year. If the government decides to extend the lease contract, it will have to pay the contractor, Davie, fixed payments of $40 million. In short, the 15- or 16-year period you mentioned is more or less on the money, by my calculations.

Given that the joint support ships are much more expensive, I think it would be even longer than 40 years before they became cost-effective, so to speak.

That means the cost difference is substantial. I will no doubt come under fire for saying that since the two types of ships clearly have different capabilities. They are not identical, and I fully recognize that. We are, however, talking dollars and cents, as well as costs. Naturally, the different capabilities or features of the two types of ships account for the cost differences.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

My understanding is that it would be to the taxpayers' advantage if the government bought the Asterix earlier, even before the end of the lease. It would be a way to ensure that the vessel it is currently leasing will become its property.

[Yves Giroux]

That is a correct assessment.

However, a word of caution is in order: don't forget that ships' capacities can be different. Assuming that the Asterix and the joint support ships are equivalent to the needs of the Royal Canadian Navy, then purchasing the Asterix as soon as possible is a much less expensive option than building the two joint support ships. If two ships are desired, then purchasing the Asterix and the Obelix is a much less expensive option than building the joint support ships.

As I said, this assumes that both types of ships adequately meet the needs of the Royal Canadian Navy. Do they? This question can be answered by the Royal Canadian Navy's marine armament and equipment specialists.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

In the report we're talking about right now, you mention that the Government of Canada overspent $2.6 billion on these ships. In a November 19 letter regarding this report, the president of the Naval Association of Canada described your analysis as simplistic and superficial, and your reasoning as suspect.

What do you say to this letter?

[Yves Giroux]

This is not the first time I have been told that my reasoning is not optimal. Obviously, when I come to conclusions that some people don't like, I'm told things like that. I have two children, so I've already been told that I was mean when I prevented them from staying up too late. That's the kind of thing that doesn't surprise me.

That said, the committee had asked me to compare only the financial aspects of the two types of vessels. I was not asked to compare the capabilities of the different types of ships, the Asterix and Obelix on the one hand, and the joint support ships on the other. I was only asked to compare costs and that's what my office and I did.

The costs are very different for the two types of vessels. Do their different capabilities and characteristics totally explain this difference in costs? It is quite possible. However, the analysis I was asked to do did not take into account the different capabilities and characteristics of the vessels.

It is possible that one vessel is an old Lada and the other a terrific Cadillac, just as it is possible that these two types of vessels are quite comparable. I don't have the expertise to compare the characteristics of the different types of vessels. Those who can are the people in the Royal Canadian Navy.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Giroux.

Thank you, Ms. Vignola.

It's time to move to Mr. Green. You have six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

I want to welcome all the witnesses here.

Please forgive me in advance. I'm also on the public accounts committee, and I feel like all my committees are starting to melt together. It would have been great to have this before we had the President of the Treasury Board before us in one of my other committees.

In the report on supplementary estimates (B), the PBO notes:

As of the publication of this report, there is currently no public document published by the Government which provides a complete list of all measures announced to date, or updated cost estimates. There is also no consistency to which organizations publicly report on the implementation of these measures. Some organizations have proactively published this data, while others have not.

The Treasury Board claimed on the 4th that “the GC InfoBase...contains all the detailed...information”. How do you think the Treasury Board Secretariat should increase the amount of information on COVID-19-related measures presented in these estimate documents?

[Yves Giroux]

The Treasury Board Secretariat made a valiant effort on collecting all the information on the various support programs under COVID-19. There are a lot of programs, and they've done a pretty good job of collecting the information and putting it in InfoBase. That being said, what is not there in terms of information is the amounts being spent to date. InfoBase includes these programs, but—

[Matthew Green, NDP, Hamilton Centre, ON]

Yes, I'll interject to say it's been my experience that the government is great at making announcements and is very public-facing with that, but when it comes to the actual specifics, we don't have this.

This is a government that claims to be open by default, so I'm wondering.... Some organizations proactively published the data. Kudos to them. Which organizations did not?

[Yves Giroux]

Employment and Social Development Canada is quite good at publishing up-to-date information. They publish information on the big programs—the ones that are spending the most.

The pieces that are missing are the smaller programs, the ones that don't tend to be as popular but still involve billions of dollars—for example, off the top of my head, the lending programs that involve billions of dollars in government money being loaned to small and medium-sized businesses. These types of programs don't tend to have reporting that's up to date. That could be a concern for many individuals, because even though these are loans, they could end up being government liabilities if the loans don't get repaid. That's just one example.

I'm sure there are many other programs that don't report up-to-date spending, but for the sake of time we can provide you a list if you want.

[Matthew Green, NDP, Hamilton Centre, ON]

I would love that list. I think you're quite right. I think Canadians would like to know. I would agree that these loans are liabilities, in fact, until they are paid on. There has been lots of scrutiny of the way some of these programs have rolled out.

Are you comfortable that you have received all the information required to adequately report on the spending for COVID?

[Yves Giroux]

Yes, I have received the information I need. What I don't have—and even if I did get it, I don't think I would have the capacity to do that—would be biweekly updates on spending to date. With the small team that I have, even if I had that information, it would be very difficult for me to report in real time.

For the costing that we do, the economic and fiscal outlook that we do, the supplementary estimates report and the JSS, so far we are by and large getting all the information we need from departments, with a few hiccups, as I mentioned in my previous answer.

[Matthew Green, NDP, Hamilton Centre, ON]

You have noted here that your monitoring framework tracks the documents. We just had the Minister of Digital Government in another committee. It seems to me that there could be some technological, big data-type responses to this—some products, perhaps, that might, on the back end of cloud computing, track and adequately summarize the expenditures that are happening.

Why do we not have a system that provides direct access to these required documents through the IT framework instead of through information requests?

[Yves Giroux]

That's a very good question. I personally would love the information exchange to be streamlined and automated, but the legislation is such that I need to submit a request to a minister, and then they respond.

[Matthew Green, NDP, Hamilton Centre, ON]

I'll share with you our perspective as members here. I know that my colleagues in opposition have even asked ministers for detailed responses. I'm unclear on whether the ministers have been able to give detailed responses, or at least they haven't been willing to, to date.

I'm wondering what recommendations you might have to move beyond the request for information towards a more proactive.... It seems like a simplistic idea, but I wonder if it's anything that you've given consideration to or if there are any recommendations that have come up through your department.

[Yves Giroux]

I have made a couple of recommendations to the leader of the government in the House with respect to access to information. It was related to the legislative authorities allowing me to have access to certain types of data or information, but not to other types.

I haven't looked specifically at the type for the manner in which I and my office get this information, except for the very specific timelines that we have to abide by under the electoral campaign proposals where we cost party proposals.

[Matthew Green, NDP, Hamilton Centre, ON]

My last question is, how would you define “open by default”?

[Yves Giroux]

It would be that you open the kimono by default and you hide just the sensitive parts. That would be cabinet confidence and tax information, and the rest is available.

[Matthew Green, NDP, Hamilton Centre, ON]

Okay.

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

That ends the first round. Now we will go to our second round.

We will start with Mr. McCauley, for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

Mr. Giroux, Mr. Stanton and Ms. Giswold, it's nice to have you with us.

I want to start by continuing with the issue of transparency. I was reading some of the blues from your Senate appearance. I guess a concern was brought forward about some of the Crown corporation financial agencies either refusing or not publishing or making available to you risk assessments. I wonder if you could comment on that.

[Yves Giroux]

That's a good point, because it involves dozens of billions of dollars of government borrowing, so it's not spending per se. What we are wondering is the extent to which Crown corporations have done a risk assessment. For those of you who may not be familiar with that, it's a sensitivity analysis. For example, if the economy deteriorates by 5% or gets better by 5%, or if there is an external shock, exchange rate, whatever, what would be the impact on the default rates of these Crown corporations that are lending to businesses in various sectors?

Some Crown corporations are very good and proactive at disclosing that, using that and showing the impact on their balance sheets of these sensitivity analyses. Others are less forthcoming when it comes to that. Off the top of my head, CMHC was quite good at indicating the risk management or the risk—

[Kelly McCauley, Conservative, Edmonton West, AB]

Who's less forthright? Name and shame one of those less forthright ones, because again, it's billions of dollars of taxpayers' risk, basically.

[Yves Giroux]

Farm Credit Corporation, Export Development Canada, and the Business Development Bank of Canada were the three that were not as transparent. Jill and Jason can correct me if I shamed an institution that shouldn't be shamed.