Procedure and House Affairs Committee on Nov. 19th, 2013

[The Chair, Conservative, Joe Preston]

Let's call the meeting to order.

To the members, we are in public today. We even have some television cameras with us. We have two different hours of meeting today. Mr. Ferguson, the Auditor General, is here to join us in the first hour.

Sir, if you have an opening statement, we'll let you go ahead with that, and then we'll ask you as hard questions as we possibly can.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you.

Mr. Chair, thank you for inviting me to participate in your examination of the administrative oversight systems, policies, and practices of the House of Commons, including the role of the Board of Internal Economy. With me today is Clyde MacLellan, Assistant Auditor General.

I'm pleased that the House of Commons and this committee wish to explore the practices of provincial and territorial legislatures and other Westminster-style parliaments with respect to administrative oversight; to consider modifications to the roles of institutions, such as the Office of the Auditor General in that oversight; and to propose any other necessary modifications to the administrative policies and practices of the House of Commons.

I would like to start by mentioning a few broad principles that I think the committee could consider during its deliberations. Before this meeting, I provided the clerk of the committee with a short paper that elaborates on these principles. I would also refer the committee to our June 2012 Report on the Administration of the House of Commons of Canada. In this June 2012 audit report, we mentioned that demands have been increasing for political and government representatives to be held accountable for their use of public funds.

In particular, we noted that members of Parliament hold positions of trust and have responsibilities to their specific constituents and to Canadians in general that are considerable. In my opinion there are three fundamental elements that contribute to the fulfilment of these responsibilities. They are transparency, accountability, and good governance.

I believe that providing detailed public disclosure of members' expenses, and having clear policies and processes for those expenses, establishes an environment of transparency, and transparency is the foundation of accountability.

In my opinion, governance can be strengthened by having an independent body that would either advise the Board of Internal Economy or be given the responsibility for all matters related to members' expenses and entitlements. Regardless of the role of such a body, it is important that Canadians are confident that its membership is independent and that the members have been chosen in a non-partisan manner.

I also believe that independent comprehensive audits, including financial statement audits, compliance audits, and performance audits, would not only strengthen members' accountability but would also enhance the public's confidence in the governance mechanisms of the House of Commons.

The committee may therefore wish to consider whether the mandate of the Office of the Auditor General should be amended to include this role. The right to conduct such audits, at the discretion of the Auditor General, should be clearly described in statute. Because we regularly conduct all of these types of audits, the Office of the Auditor General has a unique ability to contribute, and we are ready and willing to take on this role.

Canadians expect members of Parliament to spend the moneys they receive for the functions of their office in an ethical and prudent manner and for approved purposes. Members are accountable to one another in the House of Commons and to the public for their actions. It is their responsibility to carry out their assigned mandate in light of these expectations. I therefore believe that the changes the committee will decide to make, while respecting the many unique aspects of the institutions, need to be significant enough that a reasonable person with a healthy degree of skepticism would be satisfied that the rules are being consistently applied and sufficiently monitored.

In conclusion, members of Parliament must be properly supported in order to carry out their duties effectively. Refining the mechanisms that promote transparency, accountability, and good governance will enable members to fulfill their roles and responsibilities and meet the expectations of Canadians.

Mr. Chair, this concludes my opening statement. We would be pleased to answer any questions that the committee may have.

[The Chair, Conservative, Joe Preston]

Thank you very much.

We will start with our rounds of questions. We hope to be able to do one full round in this hour.

Mr. Lukiwski, you're up for seven minutes.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you very much.

Thank you, Mr. Ferguson, for being here today.

I guess I want to start off with, if we can, a comparison between the oversight provisions imposed upon the House of Commons versus those of the Senate. Obviously, most Canadians over the last several months have heard, read about, and probably been concerned about some of the controversy that we've seen in the Senate with some of the expenses being claimed by senators, which, at least on the surface, appear to be claims that should not have been made and certainly should not have been paid.

I wonder if you would, for the benefit of this committee and perhaps anyone else who may be listening, contrast the oversight provisions upon members of the House of Commons versus the oversight provisions for members of the Senate, specifically for travel and hospitality. In other words, what documentation is required for travel and hospitality claims made by members of Parliament versus the documentation required with claims for travel and hospitality by senators?

[Michael Ferguson]

Thank you, Mr. Chair.

Before I turn it over to Mr. MacLellan, I think our comments in this vein would mostly be in the context of the two audits that we completed recently on the administration of the House and the administration of the Senate. For example, in the administration of the House of Commons in terms of expenses, while we noted that for the most part they were being processed properly, there were still some situations where documentation was missing and improvements needed to be made.

I'll also turn it over to Mr. MacLellan just to see if he has anything that he would like to add.

[Clyde MacLellan, Assistant Auditor General, Office of the Auditor General of Canada]

Thank you, Mr. Auditor General.

Just as the Auditor General indicated, in order to try to answer this question I have to relate back to the audits we did in 2012 on both institutions, keeping in mind that those were audits of the administration and not necessarily the governance regime of both chambers. It's very clear in those audits that we didn't audit the Board of Internal Economy in the case of the House, or the Standing Committee on Internal Economy in the case of the Senate.

That said, we did have an opportunity to interact with how the administration plays its role in the oversight of expenditures, and what other types of bodies are present. That may be able to help in that regard.

My perception on that would be that there are a lot of similarities, perhaps more than there are differences. In thinking about that type of question earlier this morning, one of the big issues I recall from those two particular audits was the nature of documentation that was present in the case of the Senate with respect to our being able to determine whether or not the expenses were incurred for the purposes intended.

If you go back to the two different reports, we provided tables in those documents about the percentage of compliance with regard to our ability to determine whether or not those expenses met their intended purposes. That's largely for purposes of the role of members, in the case of this chamber, and in the case of senators in the case of the red chamber.

The difference is that when we did that audit, in about 98.5% of the transactions we looked at we were able to conclude that they met that condition. In the case of the Senate, it dropped down to about 94.8%. That had a lot to do with the way in which documentation was kept vis-à-vis the role of the administration and individual senators, an issue that we didn't really encounter here.

As it relates to policies and procedures, at a very macro level there were quite a bit of similarities and what you would expect to see in terms of proper authorization, proper documentation being required, proper approvals being necessary, and reviews by the administration. In both cases I think we got lots of comments that many members and many senators felt they were under a lot of scrutiny by the administration on how the expenses were being incurred. Yet we still found instances where the documentation was not sufficient in both cases, but we had a bigger struggle with that in the case of the Senate administration, which is why we made very specific recommendations in that report about that subject.

Both groups have a committee. Here, the Board of Internal Economy, and there it's the Standing Committee on Internal Economy. At a macro level there are a lot of similarities in terms of the expectations, roles, and responsibilities of both of those organizations from a governance perspective. We looked at the roles of internal audit as being important in providing some kind of oversight to assist the particular boards, and we made recommendations in both cases.

I hope that helps a little bit in giving you some clarity on those. But I would say that at a macro level they're very similar in the details, and a little bit of a difference that was sufficient for the nature of the recommendations we made.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

It is helpful, and thank you for that.

As a follow-up, you mentioned—and please correct me if I'm mischaracterizing what you said—that in the House of Commons there was 98.5% compliance.

[Clyde MacLellan]

My comment was specifically to one attribute we were looking at, which was whether or not we were able to determine they were incurred for the purposes intended.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

All right.

[Clyde MacLellan]

The overall percentage for the House of Commons was very high in terms of other categories as well, so your generalization is not unreasonable.

[The Chair, Conservative, Joe Preston]

You have one minute.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Thank you.

What I'm trying to get at is that if we're looking at 98.5% “compliance”, to use that term, where all expense claims were justified—in other words, submitted properly, with supporting documentation, and the claims were determined to have actually been for their intended purpose, and thus accepted—are you still suggesting, sir, that there is a lot of room for improvement?

[Michael Ferguson]

Certainly it indicates that there is still room for improvement.

When you look at the number of claims that go through and you apply a 98% success rate to it, it still indicates that there are a certain number of claims that need to have more scrutiny. I think that's important. So 98% sounds like a good success rate, but when you're dealing with this type of situation there is still room for improvement.

[The Chair, Conservative, Joe Preston]

Thank you.

Mr. Julian, seven minutes for you today.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair.

I thank you, Mr. Ferguson and Mr. MacLellan. Your comments are very important for our report.

We have just come back from a constituency break week. I've been in my riding, which I think is similar to other ridings across the country. Canadians are very concerned about the Senate spending scandals and are concerned about what they have seen from both Conservative and Liberal senators and how they have acted. There is some real concern out in the public mind right across the country that enough is enough. We really need to put in place a really transparent regime.

So the NDP brought forward their motion in June, and happily we were able to get the support of other parties to move towards ending the self-policing regime that exists, the Board of Internal Economy, which you made reference to.

I noticed in your presentation that you referenced very clearly the point that governance could be strengthened by either having an independent body that would advise the board, or that this independent body could be given the responsibility for all matters related to members' expenses and entitlements.

My question to you is very simple. I think in the public's mind they want an end to self-policing. They want an end to this perception that the MPs are policing themselves. What they would like to see is an independent body they can have confidence in.

You provide two doors. Is your preference that this independent governance, this independent body, be given the responsibility for all matters related to members' expenses and entitlements? Do you not feel that is an important way of re-establishing the public trust that I think has been shattered with the Senate spending scandals?

[Michael Ferguson]

Certainly, what we have done, Mr. Chair, is to indicate that we believe that some sort of independent oversight is important. We have indicated it could be advisory or it could be authoritative. Certainly, my preference would always be that it have some sort of authority, but that's not my decision to make. That's a decision for the committee to recommend.

Again, I think, in general—and I tried to make the comment in the opening statement—at the end of the day what's important is that whatever change is put in place is going to be a change that a reasonable, independent person harbouring a certain level of skepticism will believe has been sufficient, so they can be confident that the rules and expenses are being appropriately monitored.

I think the other thing that is important to remember is probably that the ground of this type of situation always shifts so that what people believe to be perhaps acceptable right now may not be what people perceive to be acceptable sometime in the future. So I think it's also important there be some mechanism to make sure that's all being monitored. And on that mechanism, again there should be some component that is independent or coming from the outside. My preference would be that it have a certain level of authority, but it could be advisory as well.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you. I think that's a clear recommendation, and we certainly appreciate your reinforcing what I think Parliament directed this committee to do, which is to put into place an independent authority around MPs' expenses.

You also referenced in your presentation an independent, comprehensive audit process, and we're certainly supportive of that. You're saying you are ready and willing to take on this role. I understand that's with existing resources, that the only thing needed to be put into operation to make that real would be changing the mandate, or adding that to the mandate.

[Michael Ferguson]

Certainly, an important component to that would be having a clear mandate so that we understand what our responsibilities and authorities are. Obviously, taking on this type of a mandate, if we did it within existing resources, would have an opportunity cost. But every audit we do has an opportunity cost, right? So for every audit we decide to do there are other audits we can't do because of that.

However, we believe this would certainly be an important role, and if we were looking at priority areas of audit, this would be one that would come high on our list. So I think regardless of whether there were additional resources that came along with the mandate or not, we would consider conducting these types of audits important enough that we would be willing to take them on.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Ferguson, those comments disturb me a little bit, because we have seen fairly substantial cutbacks in support by the current government for the Auditor General's office.

What you're telling us is that if we were to add an independent comprehensive audit of MPs' expenses, it would take away from important work in other areas. We've certainly seen with the F-35s and a whole range of other areas that we need oversight, particularly of this current federal government, of a whole range of expenditures.

I gather that additional resources would be needed for you to continue the work you're doing while adding this function of providing an independent comprehensive audit of MPs' expenses. Is that not true? You would need additional resources so that you wouldn't have to cut back in other areas that are equally important.

[Michael Ferguson]

Certainly, having the additional resources would allow us to take the mandate on and add it to everything else we're doing.

If we don't have the additional resources, we will have to either reduce some of the other audits or see if there are any places to free up the time to do it. I don't think we could absorb the mandate entirely, though, without resources and without it affecting the other work we do.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That's an important point you've made. We've objected to the cutbacks the Conservative government has imposed on your office.

I have a final question.

[The Chair, Conservative, Joe Preston]

Make sure it's under 30 seconds.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

There has been some push for having political parties put forward partial selective audits. Each party would provide a different framework and some additional information on MPs' expenses. But it wouldn't be a complete approach where every MP's expenses were subject to the same criteria. Do you agree that MPs have to do it together?

[The Chair, Conservative, Joe Preston]

Thank you.

Mr. Lamoureux.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Thank you, Mr. Chair.

Our New Democratic friend was starting to play a childish game. Maybe the NDP should just take the initiative and do what the Liberals and the Conservatives are saying, which is to move forward and say that we're prepared to provide proactive disclosure.

Anyway, it is about public trust. Politicians can only dream about having the type of public trust, Mr. Ferguson, that Canadians have in the Auditor General's office.

What I have found is that quite often when we find ourselves in trouble, because of the way affairs have been managed, one of the offices we always turn to is the Auditor General's office. Once again, in the last number of months, we find ourselves in a situation where we're turning to the Auditor General's office to get some assistance, some direction.

With respect to the idea that we need to undertake performance audits for the House of Commons administration, do you have any short thoughts you could share with us on performance audits, or the benefits of such audits?