Public Accounts Committee on Sept. 28th, 2006

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I hear what you're saying. We're getting information, and the integrity of the information isn't always there. It's not always there. What you're doing is feeding it into one consolidated report.

But if the information you're getting from the departments is not integral, how can you guarantee the integrity of the consolidated report? If you have bad stuff going in, how do you come out with a good report in the end? I'm not being facetious, I'm asking a very honest question.

[Sheila Fraser]

It's to a level of precision, and we're now using $1 billion as that level of precision. Are there errors in the financial information? I would say absolutely, there probably are errors, but it would be errors, I hope, of $50,000, or $1 million here or $1 million there. I know these are large numbers, but in--

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I know, with the margin of.... I'm thinking back to my friend across the hall who mentioned the gun registry. We heard $2 billion, then it ended up being $900 million. And we still don't know exactly. There's a little more than $1 billion. Is the error margin $1 billion within most departments?

[Sheila Fraser]

In our audit, we do all of our auditing and our testing and everything to give a level of assurance that there is not an error greater than $1 billion. But that doesn't mean there can't be an accumulation of errors that are $300,000 or $400,000. And every audit works with that, because it would be impossible for us to audit everything. We can't audit everything, so to what level of precision do you then work?

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Rota.

Thank you, Mrs. Fraser.

Mr. Fitzpatrick, eight minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I'm going to try to stay away from this tough accounting stuff and stick to something I might know a bit more about.

I take it that the response to Mr. Williams is that we don't have any of these creative accounting features in there. I'm still mystified by the terminology of a recorded or unrecorded liability, and I'm hoping we don't have any of those things in these financial statements anywhere. If there are, I think there's cause for concern.

However, I do want to go to a matter, and I went through the court awards. I notice under court awards there's an awful lot of law firms in this country receiving payments for fees and disbursements. Oh, I guess you could go to page 832; there's a whole slew of them right throughout the whole section. “Social development”--I see one there right off the bat.

[The Chair, Liberal, Shawn Murphy]

Mr. Fitzpatrick, could you give us the volume and the page?

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Oh, it's volume III, page 832. But I simply picked out one there. It's $1,737,000 for fees and disbursements. I see a whole bunch of them. There's page after page of fees and disbursements.

Are these cases in which law firms are acting for people who have claims against the government? And I'm quite sure, if I looked through some of the other sections of the financial statements, I'd see some of these same law firms working for the Government of Canada. It seems to me that when I practised law we called this a conflict of interest. If a law firm was acting for one client, they couldn't go ahead and start acting for the other client, the ones they're suing. That was a conflict of interest.

Am I missing something here? How does it take place in Ottawa that we have large law firms in one breath helping people sue the government and in other cases doing legal work for the government?

[Charles-Antoine St-Jean]

I would refer these questions to my colleague, the Deputy Minister of Justice, who might come and answer that question.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

You might put a red flag on that one for further inquiry later on, because it seems to me rather strange. I'm only a small-town lawyer, but it seems to me we understood that you couldn't act on both sides of a case. But I'll leave that for now.

[The Chair, Liberal, Shawn Murphy]

To bring closure to it, Mr. Fitzpatrick, do you want the witness to follow up and get back to you with a response?

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I would like that, if you would.

There's another area I'm interested in too. I notice that some of the inmates are winning claims against the Government of Canada, I guess in terms of the quality of care they're receiving in our correctional institutions. I'm assuming some of the payments under the court awards and so on would be to pay the fees and disbursements for their lawyers. I'm curious. Do you know whether any of these inmates would have been accessing the court challenges program for their claims against the government?

[Charles-Antoine St-Jean]

I could not answer this question, but I'll get back to you.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Okay. I'd be interested.

I also notice there's a section in volume III that goes through what I would call money that was lost by the government because of illegal activities--things like, in Canada Revenue Agency, illegal use of credit cards and what I would call embezzlement, money taken out of accounts and so on. It seems like every department has some of these occurrences. The credit card one jumped out at me.

I'm assuming, sir, that people who would misuse credit cards, abscond with other people's money through credit card usage.... First of all, I'd assume they were charged under the Criminal Code, because to me that's a Criminal Code violation. Secondly, I'm assuming, as a matter of discipline, that they are no longer working for the Government of Canada. Are those safe assumptions?

[Charles-Antoine St-Jean]

That's on page 216. Is the unauthorized $2 million withdrawal from one CRA credit card what you're referring to?

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Yes, but they show up in other departments too.

[Charles-Antoine St-Jean]

I cannot give you a definite answer on this. I'll get back to you on what happened in those cases.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

The other point I wanted to get to is the public debt charges. I see they're almost $34 billion.

There are people who subscribe to the point of view that this is nothing to be too concerned about. In fact, we had one NDP government in Ontario that figured you could just borrow yourself into prosperity. There was no end in sight. Apparently he's taking his wisdom elsewhere these days.

Would the payment on the debt charges be the federal government's single biggest expenditure?

[Charles-Antoine St-Jean]

The transfer to people would be the single largest expense. The $33 billion out of $220 billion is a big one, but not the largest.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

What would the next one after that be?

[Charles-Antoine St-Jean]

You have transfer to people, then the transfer to government, about $40 billion.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

But it's a significant portion of the total expenditure, and all we're really doing is paying interest to creditors, right?

I want to understand this point too. By paying $13 billion down on our debt, we're decreasing our expenditures under this section by something between $600 million and $700 million a year. Is that a correct assumption?

[Charles-Antoine St-Jean]

The $13 billion is the year's surplus, and this is applied against the accumulated deficit. The actual debt to the Government of Canada, if I'm getting it right, went down by about $6 billion. The other $6 billion was used for other items, to finance new receivables. I believe that's how our accounts.... The receivables went up by a certain amount, but the accumulated deficit went down by $13 billion. So to a great extent, that reduces the interest costs in future years, but it's not one and one.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Right. But those savings are freed-up money every year going forward. They can be used for new programs, government services, and tax reduction. And it's not a one-year deal; it's something that would happen every year going forward.