Evidence of meeting #38 for Natural Resources in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was crown.
A recording is available from Parliament.
12:05 p.m.
NDP
Catherine Bell NDP Vancouver Island North, BC
The NRU, the Chalk River facility, is going to be in existence for much longer than anticipated. Do you have any sense of how much money will be needed to continue long-term operations there? I suspect you wouldn't.
12:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
No, I don't know that.
12:05 p.m.
NDP
Catherine Bell NDP Vancouver Island North, BC
Will you be doing any more audits on that facility in the near future?
12:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
We do an annual financial audit each year on March 31. We will be doing a special examination again in four years' time, because it's required once every five years, so we will be doing a special examination when it is required.
12:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
That would be 2012.
12:05 p.m.
NDP
Catherine Bell NDP Vancouver Island North, BC
It's 2012, and it was supposed to only last until 2011. I just wonder if you would do one sooner, a special one, because of the issues around it.
12:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
It's not currently in our plans. We'll have to see what develops. Obviously in doing the financial audit, we will be looking at the consequences of the decision to cease the MAPLE project, because that will have financial consequences on the corporation in two ways. I will perhaps explain that for the committee.
One factor is that certain costs have been capitalized in the financial statements of the corporation, and each year we have to do what we call an impairment test to make sure those assets still have value. That will be done as of this year.
Under accounting principles as well, whenever a project or a part of an operation is ceased, one has to estimate all the costs of ceasing that operation. All the costs related to closing the project, even costs that may go forward for several years, have to be estimated at the time the decision is made and recorded in the books. That is another area we will look at, and of course we'll be looking at agreements and things like that, and potential consequences there.
12:10 p.m.
Conservative
The Chair Conservative Leon Benoit
When do you anticipate doing the study on the closing of the MAPLE project?
12:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
There will obviously be some effect on the financial statements at March 31, 2008. Those statements, as I mentioned in my opening statement, are not yet public, but they should be in the report that is to be tabled, I believe, by the end of this month.
The decision to actually cease the project was made in the 2008-09 fiscal year, so those costs would all appear in the financial statement as at March 31, 2009, next year. Obviously we will be working with the corporation to make sure they adequately document and assess all the costs so that we can do the audit.
12:10 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
We go now to the official opposition again. We'll go to Mr. Scarpaleggia, and to Mr. Alghabra if there is time left.
12:10 p.m.
Liberal
Francis Scarpaleggia Liberal Lac-Saint-Louis, QC
There'll be time. I haven't been part of this study, so I don't have many questions.
I heard a rumour, I guess you could call it, that going back in history with this project, the cost estimates were terribly underestimated by a factor of five or six, and that they had already surpassed their cost estimates for the entire project before they even began digging. That is the way it was put to me.
The other thing I heard is that there were internal management problems so bad that AECL--or more specifically, I suppose, the MAPLE project team--started to hemorrhage scientists.
I'm just wondering if you'd ever come across those things.
12:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
That certainly has never been indicated in any of the reports we have done, so I really can't comment.
12:10 p.m.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
Thank you.
Madam Fraser, as the ultimate overseer of the government's assets and resources—
12:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
No, in fact, that's you all here.
12:10 p.m.
Some hon. members
Oh, oh!
12:10 p.m.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
Thank you, and that's why I'm about to ask you this question.
Thank you for that clarification, but we certainly couldn't do our job effectively without your help.
12:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Thank you.
12:10 p.m.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
What steps, in your opinion, should be taken if a government is about to, or choosing to, privatize a crown corporation? What are some of the due diligence steps or consultations that should be undertaken, and would you be involved in that prior to the decision?
12:10 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
There are obviously, as the member has mentioned, a number of steps that should be taken in any kind of due diligence. One is obviously an options analysis. Another one would be a very good evaluation of the worth of the business, because establishing a price is always a process of negotiation, and so the government would have to have a very good idea of what the business was worth.
As in any kind of negotiation, what concessions are you willing to make? How much are those worth? What long-term agreements or commitments will be put in place? How do you protect public assets in that—should there be public assets? Or how do you protect public safety? Every crown corporation has, or should have, a public policy role. So how do you manage that aspect? It's not simply a question of selling the assets or the business, but the public policy role in all of that. Then you would need to have really good negotiators who are able to understand the business deals that will be made.
It is very unlikely that we would ever be involved in that, other than perhaps to express an opinion on how the transaction would be reflected in the books of the government.
12:10 p.m.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
So how do we make sure that if a process like that is taking place, those factors you just mentioned are applied properly? Do we have any checks and balances within a department, or with your office? Or do we only have the opportunity to do this after the fact, when a policy decision has been made?
12:15 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Obviously the policy decision is critical in that, and we do not comment on policy decisions.
We have done work in the past when certain assets have been privatized. I know we've done work on the airports; we've done work on Petro-Canada, and I believe we did work on Nav Canada as well. So we did work on a number of privatizations in the nineties; the office did look at those to see how they had been managed and what lessons should be learned.