Public Accounts Committee on Feb. 28th, 2007

[The Chair, Liberal, Shawn Murphy]

Members, I'd like to call the meeting to order.

I want to welcome everyone here again. We are back with the very same faces as we had on Monday, and this is basically a continuation of the chapters that we were talking about on Monday afternoon, chapters 1 and 2 of the November 2006 Report of the Auditor General of Canada dealing with expenditure management. Chapter 1, of course, deals with expenditure management at the government centre, and chapter 2 deals with expenditure management within the departments.

We have the very same witnesses as we had last Monday: of course our auditor, Sheila Fraser, accompanied by Doug Timmins, assistant auditor general; Tom Wileman, principal; and Richard Domingue, director. From the Treasury Board Secretariat we have the secretary, Wayne Wouters, and Dave Moloney, the senior assistant secretary. For some of these witnesses, this is the third appearance this week before the committee, so they must be getting tired of us.

I understand that there are no opening statements, so we'll move right into the questions. I don't know whether this will take the two hours, so I would suggest that I just go a round, and then—of course I'm in the hands of the committee—at the end of the first round we can decide what we will do at that point in time.

Mr. Williams.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Thank you, Mr. Chair. I was a little taken aback when I saw that the agenda was the same as the last meeting and I was wondering why we needed two meetings on this particular issue. I am sure the witnesses felt that they had adequately explained themselves. Anyway, I will leave that to the steering committee to explain.

Mr. Chair, with your indulgence, I will just read a little bit from the Edmonton Journal of February 17. I will just basically say that it has been announced that the public accounts in the province of Alberta have decided they are going to provide research staff to their own public accounts committee. It says here: “The Alberta legislature watchdog will no longer be without a dedicated staff, nor will it be squeezed into so few meetings that it cannot...” do its job properly. It's going to be able to meet all year round.

My congratulations to the public accounts committee of Alberta. They are now ahead of us, because they are going to have some full-time paid staff.

[An hon. member]

Is Lyle Oberg still a member of that committee?

[John Williams, Conservative, Edmonton—St. Albert, AB]

I am not sure whether the finance minister is still a member of the committee.

Anyway, I have the article here in both languages. I will table it with the clerk.

[The Chair, Liberal, Shawn Murphy]

I appreciate hearing that, Mr. Williams. On behalf of the committee, I want to congratulate them.

Thank you, Mr. Williams.

As I said, there are no opening statements, so we'll go right into the first round. We're just going to have one round, and then, of course, I'm in the hands of the committee.

I'll remind you, Mr. Rodriguez, that we have eight minutes. You may want to share with one of your colleagues, because we may not get back to your.... No, we'll get back once; I'm sorry.

Ms. Sgro.

[Judy Sgro, Liberal, York West, ON]

This is to the Auditor General. Why didn't you recommend greater flexibility in the expenditure management system when it reaches the Treasury Board stage?

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

I'm afraid, Mr. Chair, I don't really understand the question.

[Judy Sgro, Liberal, York West, ON]

The audit found that a major cause of alignment problems meant changes having to happen at the Treasury Board level. You didn't recommend any changes to that. In the MOU, there wasn't an opportunity to show the changes that were being made, and so the departments didn't reflect those changes in their submission to Treasury Board. I would have thought you would suggest there be more flexibility in that area.

[Sheila Fraser]

I am just trying to think what the alignment was. One of the issues we had was that many of the initiatives were approved before the source of funding was necessarily decided; as well, on alignment, that the funding was approved and was not in line with what the programs necessarily needed. We were suggesting that the government needed to take a look at all of that.

We try not to be too prescriptive in the recommendations. Knowing that at the same time the secretariat was doing a review as well, there could have been potentially some pretty significant changes in the way the expenditure management system was done. It really is up to government to decide how they want to address the specific issues that we bring.

[Judy Sgro, Liberal, York West, ON]

Do you agree that the reviews of the ongoing programs are sufficient to deal with the problems that have been identified in the report?

[Sheila Fraser]

No. We indicate in the report that we don't believe that the reviews of ongoing spending are sufficient, and that in fact there is very little rigorous systematic review of ongoing spending.

The secretariat has certainly indicated that the government has indicated that they agree with this. I think they will be proposing some sort of regular evaluation of programs, which is something the office has been supportive of for many years.

[Judy Sgro, Liberal, York West, ON]

Okay.

[Sheila Fraser]

Mr. Chair, could I please add that we have a recommendation on the alignment, as pointed out in paragraph 2.46. We say that the Treasury Board Secretariat should assess risks relating to alignment issues, so it would be part of their broader review.

[Judy Sgro, Liberal, York West, ON]

You weren't specific about saying greater flexibility. I guess that was the issue.

[Sheila Fraser]

No, it would be up to government to decide how they wish to structure it.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

I'd like to make an aside. I read in one of your documents that the present expenditure management system, which has been in place since the mid-1990s, was designed when there was a deficit. What's the difference?

[Sheila Fraser]

When there was a deficit, spending cuts were made and there was much greater concern about new initiatives. A great deal of attention was given to new programs. Ongoing spending had already been cut and continued to be cut. This tendency to focus mainly on new initiatives has continued. Another viewpoint is needed now because of the change in financial situation.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

During the 1990s, cuts were made in order to balance the budget. Normally, when the budget is in a deficit position, there are fewer new initiatives, or there are none or virtually none.

[Sheila Fraser]

There were fewer. I think that was one of the reasons why supplementary estimates more than doubled over the previous period. New initiatives are examined much more carefully because spending is being reduced to what is believed to be the minimum for essential programs, and a lot of attention is being paid to spending increases. That was the management philosophy. Now, of course, the situation has changed. It has to be reviewed.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

It has to be adapted to the new situation.

[Sheila Fraser]

Yes, that's it.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Mr. Wouters, at what point are you made aware of expenditures on supplementary estimates before legislative approval? Is there a typical timeframe at which point you'd become aware of them, or do you become aware of them after the fact?

[Wayne Wouters, Secretary, Treasury Board Secretariat]

For most supplementary estimates, we are generally made aware of what will be in them at the time of the tabling of the federal budget, because then we know that most of those items will not be getting into the main estimates.

So for any new spending proposals articulated in that budget, we have a good sense that they will need to come to the Treasury Board to seek authority.

First, there has to be an overall cabinet decision that—

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Perhaps you misunderstood the question.

At times, prior to supplementary estimates coming to the House of Commons for approval, departments begin their expenditures before legislative approval of those expenditures. What kind of timeline would there typically be? At what point would you become aware that a department is making these expenditures without legislative approval?