Evidence of meeting #8 for Public Accounts in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was space.
1:10 p.m.
Bloc
Richard Nadeau Bloc Gatineau, QC
Good afternoon, Ms. Bloodworth, gentlemen, and Mr. Chairman.
This whole issue is quite an interesting one, and my goodness, quite crazy too, in that we're talking about a procedure that required a legal opinion. Could a situation like this recur today, based on your experience?
1:10 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
Yes, I can certainly see circumstances where one might require both accounting and legal expertise on a particular issue.
1:10 p.m.
Bloc
Richard Nadeau Bloc Gatineau, QC
I am thinking, for example, about the $39 million spread over 15 years. It is a situation that appeared abnormal in the eyes of the authors of the report, that appears abnormal to us as well, and that titillates us. It is the reason why we have heard from experts and extended a meeting. During the last meeting, I asked for an explanation that seemed highly technical to me, and that I should have interrupted.
What leads a department to make a decision like that when we know that there is something abnormal and immoral about it, although it is legal? How do you approach the situation to make a decision like that? How can we make sure it does not happen again?
1:10 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
Well, from my perspective, we had a situation where at least some were proposing that the accounting treatment should change from what it had been the year before. That's the situation we were in, because the year before they had not put these amounts into the appropriation. So people were proposing to change it.
My role was to say, well, why are we changing it, and to try to understand why we were changing it, and why we should, and were there any other options? In that sense, it was exactly the same, obviously, as the Auditor General has pronounced, but if there were another situation that had the same kinds of questions, the same thing would happen today, and it might well require both accounting and legal expertise, and it might indeed require policy and some other kind of expertise. With a hypothetical, it's hard to be certain.
1:10 p.m.
Bloc
Richard Nadeau Bloc Gatineau, QC
Was spreading it over 15 years standard practice? Was that an acceptable accounting decision from the start?
1:10 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
Well, I can't answer as an accountant because I'm not an accountant. I do know that the year before the accountants had decided to treat it differently, or differently from what some are proposing now, and they were proposing to change it. But I must say, I didn't find that unusual. I'm a lawyer by profession and you spend most of your time on the issues that are not particularly clear; that's why you need professional expertise. I assume with accountants it's much the same; there are issues that are complicated and different people can have different views. So I didn't find that surprising.
1:15 p.m.
Bloc
Richard Nadeau Bloc Gatineau, QC
If you do not have the necessary knowledge — I will not use another term — to answer that question, is there someone here who can? Is it acceptable to spread such an amount over 15 years?
1:15 p.m.
Scott Leslie Senior Director, Special Procurement Initiatives Directorate, Department of Public Works and Government Services
Perhaps I can try. To some degree, from a contractual perspective, there are capital leases where it's common to spread a payment over a number of years; that type of situation is fairly commonplace.
1:15 p.m.
Bloc
Richard Nadeau Bloc Gatineau, QC
If that can be done in certain circumstances, why are we having this meeting today and why did you need to consult two lawyers on this matter?
I do not understand the scope of the issue. Is this a $10,000 question? If that can be done in certain circumstances, why did you need a legal opinion?
1:15 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
I can explain to you why I asked for a legal opinion. I asked for a legal opinion because it was clear to me, in discussing with the people who had been involved in this, that they were using the terms “debt” and “liability” interchangeably, and that somehow that was significant for the accounting decision.
I knew as a lawyer that debt and liability were not the same thing. There are liabilities that are not debts. I didn't know the significance of it, but it was apparent to me that the distinction was not clear in what people were talking about, so I asked for a legal opinion.
1:15 p.m.
Liberal
The Chair Liberal Shawn Murphy
Thank you very much Mr. Nadeau.
Next is Mr. Fitzpatrick, for eight minutes.
1:15 p.m.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
I want to get right to it. It seemed as though the whole thing was resolved on January 31, 2004, when the $21 million in question was booked in the consolidated public accounts as a non-recorded liability. At that point, Madam Bloodworth, you would agree that now everything was okay and in line with section 37 of the public administration act--that this was now a liability, and that would resolve all the issues and debates that must have been taking place?
1:15 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
I'm sorry, what was the date you were talking about here?
1:15 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
I can't speak to that. My only involvement was in the week or so around---
1:15 p.m.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
But it was booked--you know that was booked in the public accounts on.... You're the head of the department; you would know whether that was booked or not in the public accounts on March 31 at year-end.
1:15 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
I'm not the deputy head for these particular finances, but I do know that this amount was flagged in the performance report of the Firearms Centre, and I do know it was put in the public accounts, but I don't know the date. If that's the date, that's fine.
1:15 p.m.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
Mr. Shearer, you would have believed that booking that on March 31, 2004, now made everything above board, and there was no question about it--yes or no? We haven't much time.
1:15 p.m.
Former Assistant Deputy Minister, Service Integration Branch, Department of Public Works and Government Services
Neither do I have a background in accounting or law, but I am aware that it was booked at the end of March in the finance--
1:15 p.m.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
It was booked on March 31, 2004, and that seemed to make everybody on our previous committee think everything was okay, because it was booked as a non-recorded liability. I was a member of Parliament; I was still in the dark on this thing. Maybe there was no deception on your part, but I don't think there's anybody, certainly in the opposition, who understood what in the world was going on, and it's taken us a lot of time to figure it out.
I still want to ask you a very fundamental question. You're a lawyer by trade. Section 53 of the Constitution of this country says all money bills must originate in Parliament. The Financial Administration Act clearly states, in a section...it reinforces that whole point.
As deputy minister responsible for that department on March 31, 2004, can you explain to me where the parliamentary authority had come from prior to that date for this expenditure?
1:20 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
First--
1:20 p.m.
Conservative
Brian Fitzpatrick Conservative Prince Albert, SK
That should be a simple enough answer. I don't need a long explanation on it. Where did it take place?
1:20 p.m.
Former Deputy Minister, Public Safety Emergency Preparedness Canada, As an Individual
I was just clarifying once more, Mr. Chair, that I was not the deputy minister responsible for these amounts--as Mr. Baker, I think, made clear.
However, I'm saying I'm well aware that there are lots of contingent liabilities that do not go against the corporations. All the lawsuits against the Government of Canada are booked as contingent liabilities and not against the corporations, so I did not find it surprising that there would be some--