Public Accounts Committee on Nov. 20th, 2007

[Bill Matthews]

If we're dealing with fuel stocks, they are captured under another asset category, not as a prepaid expense.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Okay. Thank you.

In volume I on page 2.28, under “Comprehensive land claims”, it says:

There are currently 71 (74 in 2006) comprehensive land claims under negotiation, accepted for negotiation or under review. A liability of $3,200 million ($3,200 million in 2006) is estimated for claims that have progressed to a point where quantification is possible.

Can you tell me how many of that total have been quantified?

[Rodney Monette]

Thank you, Mr. Sweet.

I'll ask my colleagues to jump in if I don't have this right. I believe this figure actually would reflect those claims for which Indian and Northern Affairs Canada has actually gone through and attached a value to each possible claim. If I understand correctly, all of them in that balance—and again, I'll ask my colleagues to correct me—would be quantified, so the whole number would reflect some fairly good estimates, or their best estimates of what's required.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

So you're actually saying to me that the $3 billion is projected from the 71.

[Rodney Monette]

Perhaps I'm not understanding the question appropriately.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

Well, the language I'm concerned about says that there are 71 outstanding, and it says that there's a $3.2 billion liability estimated for claims that have progressed to a point at which quantification is possible.

[Rodney Monette]

I believe this figure does reflect the 71.

Can we confirm that for you, Mr. Sweet, just to make sure we've answered correctly?

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

It would be great if you would. Thank you.

This is for the Auditor General. I get a lot of e-mail regarding public sector pensions. People are concerned, in the private sector, about the future liabilities for those and the capability of municipalities and provinces.... I also get some in the federal government. They're concerned about future liabilities and our ability to meet those liabilities.

Do you have any concern, when you look at the federal books, about meeting those future liabilities?

[Sheila Fraser]

I guess the short answer to that is no. The government has recorded the liability under generally accepted accounting principles for all its pensions, including veterans, which was a change that was made a couple of years ago. They're all fully recorded and disclosed in the financial statements. In fact, Canada is one of the few countries that actually does that. I think the fact that they're there means they're being managed.

[The Chair, Liberal, Shawn Murphy]

Your time's up, Mr. Sweet.

We'll have Mr. Wrzesnewskyj for four minutes.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Chair.

I've noted that the tax receivables, what we've been unable to collect, have increased significantly, by over 10%, to $6.5 billion, which is almost half the increase in our tax revenues over the last year. Proportionately, in the various categories, who are the biggest tax avoiders or skippers? Is it corporate or personal? What are the particular categories?

[Rodney Monette]

Thank you.

I don't know. Paul, do you?

[Paul Rochon]

Just as a point of clarification right at the beginning, the tax receivable number largely reflects the fact that as of March 31, we had received in cash a certain amount of money. But there was another amount that was in fact calculated and verified in June that showed that the government was owed an amount different from what we received in cash. It's as much an accounting issue as a question of accounts in arrears, if you wish.

In other words, as of March, we'll have received a certain amount of money, but as of that time, only a certain percentage of taxes owed has been received. Over the course of the rest of the summer, the government will refine that estimate and determine how much is actually owed, and that's largely what drives the receivables number.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

So we can surmise that the number will decrease, but it doesn't address my primary question. Besides some of the accounting difficulties you're having with this, we do have people who are in arrears or who are avoiding or skipping out on their taxes. Do we have a number that breaks it down for us proportionately?

[Rodney Monette]

Thank you, Mr. Chair.

Mr. Wrzesnewskyj, on page 2.24 of volume I there's a table that shows the receivables, and it breaks it out by individuals, employers, corporations, and non-residents. It shows the allowance for doubtful accounts against each one of those categories. That would show you the proportion of the amount receivable from corporations we have an allowance for and the proportion of the amount from individuals. That's on page 2.24.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Great. Thank you. We'll do a little analysis on that one.

I've also noted that various departments are moving at different speeds in terms of their accounting processes, and CIDA is perhaps one of the worst departments, which is perplexing. In a lot of ways, CIDA's primary expenses are not for services or operations. They pass on government funding to NGOs and other entities.

Especially since they don't have ongoing operations, or that's not a majority of their costs, why, in particular, is CIDA somewhat lackadaisical in their accounting reporting?

[Rodney Monette]

I know CIDA is currently revising and having a look at how they're presenting information, to try to make it more understandable, easier to do performance assessments, and so forth. I know they're going through that process. They're working on being more accountable. They've told us that they think they'll be ready to have their opening balances on their statements ready for initial audit by 2009. I'm not sure that is necessarily the case, and I think we want to have a look at that.

In terms of accounting systems more generally, I think we need to do more work government-wide in this area. There are some significant areas that need attention.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Perhaps to clarify a previous statement I made, I'd like to clarify the record. When I said of the average Learjet that the 1% GST cut would generate about $100,000, which is equivalent to 500,000 trips to Tim Hortons for a coffee and doughnut for the average Canadian, I missed one decimal point. It's actually five million. So the average Canadian would have to go to Tim Hortons five million times to get the sort of benefit that Canada's billionaires club received.

[The Chair, Liberal, Shawn Murphy]

Nobody was questioning that number.

Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Just a quick note. I appreciate the contrition on the part of Mr. Wrzesnewskyj, because the rate that Canadians paid on their tax forms was never 15.5%; it was actually 15.25%. So he did get that wrong, and I'm glad we can correct the public record in advance of the next round of questioning.

Thank you.

[The Chair, Liberal, Shawn Murphy]

The public record speaks for itself.

Mr. Lake, last questioner, four minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

In the spirit of correcting Borys' comments, I'd also like to correct the fact that, of course, he made the comment that lowest-income Canadians.... I'd simply like to clarify that lowest-income Canadians don't actually pay income tax. However, they do pay GST, but I won't ask our guests to calculate the savings for them.

I also look forward to maybe an experiment we could do, wherein Borys goes to Tim Hortons—

[The Chair, Liberal, Shawn Murphy]

Mr. Lake, we're talking about the public accounts here, please. Let's direct our questions to the witnesses who are here. They do not make interruptions when you....

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

--and asks everybody there for a nickel for the federal government. It would be interesting to see the response.

But going to some questions I had, on the decline of $95.6 billion from the 1996-97 peak in the accumulated deficit, I'm curious to know what the impact is of that decline on an annual basis for the government and how much flexibility that maybe gives us in terms of our ability to spend.

[Rodney Monette]

Thank you, Mr. Lake.

If you look overall over the last 10 years, the surplus has been in the neighbourhood of the $8 billion to $10 billion range. That reduces the accumulated deficit, and that obviously provides some additional space. I've asked my colleague from the Department of Finance to perhaps comment on how that flexibility plays out in terms of the fiscal framework.