Public Accounts Committee on Nov. 20th, 2007

[The Chair, Liberal, Shawn Murphy]

Just before we go to Mr. Hubbard, I have one more brief question to you, Mr. Monette.

In the public accounts there's reference to a $17 million settlement made by the Department of Fisheries with a claimant, but there's no name. Can you get us full particulars of that claim?

[Rodney Monette]

Absolutely, Mr. Chair. I'd be happy to do that.

[The Chair, Liberal, Shawn Murphy]

Sorry for the delay.

Mr. Hubbard.

[Charles Hubbard, Liberal, Miramichi, NB]

Thanks, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Excuse me, I'm just going to get the time.

You have four minutes, Mr. Hubbard.

[Charles Hubbard, Liberal, Miramichi, NB]

The Department of National Defence has been mentioned several times this morning. Many Canadians are concerned about the cost of the war in Afghanistan. As members, how do we find out what it's really costing? Does anyone at the table have an amount that, for example, the war cost us last year?

Also, with DND accounting, do they, for example, cost the need to provide veterans with benefits? Many of these young men and women are coming back at 25 or 30 years of age with severe disabilities, and the cost of that war in terms of projecting its entire cost into the future is a great concern to some people in our nation. Around the table, can anyone give us an idea of what it cost last year or what it may cost in this fiscal year?

[Rodney Monette]

Thank you, Mr. Hubbard.

In the report on plans and priorities for the Department of National Defence, and I know this because I worked at that department, there's a full section—and I apologize, I don't have that with me at the moment—that shows the full cost for all of the deployments of the Department of National Defence, including Afghanistan. It shows the information in terms of the incremental cost by year. It also has a full cost as well. That information is in the RPP. I don't recall the exact figures off the top of my head. The incremental cost for the last fiscal year, if I remember correctly—and, please, if I may, Mr. Chair, I'm going from memory here—was somewhere, I believe, in the neighbourhood of about $800 million, the additional cost of being in Afghanistan. That is all laid out in the report on plans and priorities.

The second part of your question, Mr. Hubbard, had to do with veterans benefits. Most of those benefits go through the Department of Veterans Affairs, and they would have a full accounting for that as well in their report on plans and priorities. There are some special funds for the folks who are coming back from deployment. There are some moneys in DND for that.

[Charles Hubbard, Liberal, Miramichi, NB]

As, I guess you might say, an expert in that area, could you provide us, as committee members, with that...? I'm really astounded: $800 million is the total incremental cost of maintaining that size of a group in Afghanistan? That would be over and above the normal cost of the same soldiers or service people who are stationed in Gagetown or Petawawa or wherever it might be?

[Rodney Monette]

Yes, Mr. Hubbard, you're absolutely right. To calculate the incremental cost, for example, if you're paying somebody anyway, whether they're here or in Afghanistan--

[Charles Hubbard, Liberal, Miramichi, NB]

Yes, I fully understand about that, but that is what you would offer to us.

[Rodney Monette]

That is what we figured, yes.

[Charles Hubbard, Liberal, Miramichi, NB]

We also hear, Mr. Chair, that it has been difficult for CIDA to bring in their accounting methods and procedures to meet your obligations or your intent in terms of.... Is there any information that we as a committee might help you with? If we could assess why CIDA.... CIDA certainly attracts a lot of attention. We're looking not only at Afghanistan but at other places where CIDA is certainly criticized for its efforts and its lack of accountability. Can we expect that CIDA will be brought up to the standards that you have already indicated with the other 22 departments you're working with?

[Rodney Monette]

Yes, Mr. Hubbard. I know that with CIDA, of course, a lot of their programs are grants and contributions, and people wonder what kind of impact it is having. That's one issue.

From an accounting point of view, I think we can say...and I think they probably have a fair amount of detail as to where the money is going, and I would expect in terms of their report on plans and priorities, they would have a fair amount of that information as well.

You're absolutely right, we're asking all departments to go through and look at how they present those costs, how they capture them and present them in a way that is going to make sense to parliamentarians. They're continuing that work as well.

[Charles Hubbard, Liberal, Miramichi, NB]

Thank you, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Hubbard.

Mr. Fitzpatrick, you have four minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Thank you, Chair.

I'm looking at page 10 on the slides, the non-financial assets. I assume basically what we're talking about is real estate and capital assets of the government, physical assets. Is that value based on fair market value or is it historical costs? How do you arrive at that value?

[Rodney Monette]

Thank you for that question. I'll just ask my colleagues to jump in if I don't have this right.

For big equipment and capital equipment, basically it's the historical cost that has been depreciated. So it's like a net book value. For example, at the Department of National Defence, I think the figure was about $25 billion. The historical costs would have been something different.

For inventories, again it's the actual cost that we paid to buy those things. And unless my colleagues jump in and correct me here, I'm not aware of any situations where for things like equipment or inventory we actually increase those values. It's always the historical cost.

Now for land holdings and buildings, I believe it's the same. We use the historical cost as well.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Okay, thank you.

In reality, it could be worth more than what's stated in there.

[Rodney Monette]

That's absolutely correct.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Especially real estate, if it's the historical cost.

[Rodney Monette]

That's correct.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

In terms of the paying down of debt, I see we're down to 32.3% of GDP, which I think is quite remarkable given where we were 10 or 12 years ago. I think the mini budget announced another paydown, which I presume would occur by year-end, of another $10 billion or so. When the government pays down debt, I'm just curious, how do they do that? Is there maturing debt that comes on the market and they just don't roll it over? Do they go out on the market and buy up government bonds that are out there? If they do, do they buy long-term bonds, short-term bonds? What is the strategy in paying down debt?

[Paul Rochon]

The government in fact issues a debt strategy, which was an annex to the last budget. But to go to your question, by and large, the manner in which the government pays down debt is not to renew maturing bonds and treasury bills. There are bond buybacks, but those are more to---

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

There's enough coming up on maturity that you can just deal with it that way. That makes a lot of sense.

[Sheila Fraser]

Mr. Chairman, I would like to raise an issue we've raised for several years about the terminology that's used when we talk about paying down the debt. In fact, what's happening is there's the accumulated deficit, which is the accumulation of all the losses and profits since Confederation. So when government has a surplus of $10 billion, it reduces that accumulated deficit, simply an accounting accumulation.

When you turn to the next page, if you actually look at what everybody would think of as debt, interest-bearing debt, it's the very first number. For example, last year there was a surplus of $13 billion and some. The actual debt reduced by $7 billion.

So there's confusion a bit around the term “debt”, meaning accumulated deficit. They are two different things. We've been trying very hard to get people to not use “debt” for “accumulated deficit”. I say this just so you know that there is a distinction there.