Public Accounts Committee on May 13th, 2008

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

Toronto lawyer James Love, who donated $63,000 to your two leadership campaigns, was appointed to the Royal Canadian Mint. He's also served on two advisory panels on a voluntary basis and was provided with expenses of $75,000 and $10,000. As a Mint director, he receives up to $6,200 a year, plus a per diem of up to $485. Can you confirm whether his personal and political connections have anything to do with his appointment?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

That is so unfair. That is just typical of you. That's why I've given you notice about your defamatory remarks about my wife and my children and me. I'm only answering these questions because we're in committee today. I will not answer your questions in the House.

Mr. Love is one of Canada's leading tax experts. He knows a lot more about tax than you could ever hope to know. He's serving without compensation on the tax fairness panel led by Mr. Godsoe.

So this is exactly the kind of Canadian, Mr. McCallum, we hope will come forward, work for one dollar, and serve this kind of important function. He also served, if you bothered to read the report--and I'm sure you didn't--by heading up the panel that developed the registered disability savings plan, a brilliant plan that has been looked at around the world to help people with disabilities--for one dollar.

I know you wouldn't appreciate that kind of dedication by a Canadian, but you should think twice before you go after much-respected Canadians, greatly respected Canadians, in a petty, gutter-like way like you do.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Flaherty, with all due respect, I appreciate the pro bono or one-dollar work that individuals like Mr. Love and others do. My concern is with whether the government, in general, and you as a minister, have followed appropriate processes. Nothing that I said was intended to say anything negative about Mr. Love.

I can tell you that my earlier issue with the Ethics Commissioner was not intended to be personally negative about anyone, you or your family, and I regret--

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Then apologize, then apologize.

[John McCallum, Liberal, Markham—Unionville, ON]

I regret if you took it that way.

Mr. Flaherty, it's now in the hands of the Ethics Commissioner. I will make a commitment to you.

[The Chair, Liberal, Shawn Murphy]

We're talking about a contract here. The contract we're dealing with is $122,000 let to Mr. MacPhie and a couple of other contracts let to.... Let's bring it back into that domain, please.

[John McCallum, Liberal, Markham—Unionville, ON]

I commit to Mr. Flaherty today that if the Ethics Commissioner in her inquiry finds that our case was wrong, at that point I will apologize to you and to your family if I caused any embarrassment. So I would ask you, since you did not follow administrative functions in this matter, by your own word, to now apologize to Canadians for that.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I said administrative functions were not followed, and I already said in my statement that I regretted that.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. McCallum.

Thank you, Mr. Flaherty.

Monsieur Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chairman.

Good day, Mr. Flaherty.

With respect to the $122,000 contract MacPhie & Company received to prepare a communications plan and advice for Budget 2007, you acknowledged that certain administrative rules were not followed.

For this year, 2008, did you require similar work to be done by a communications firm, or was it done in-house?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I would have to check the records concerning whether there was some outside help this year. There probably was at various times. This year was different. In 2007 we had the huge issue of fiscal imbalance, which was highly controversial. We had countless submissions on the subject, and of course it was a very sensitive subject with the provinces and with the territories.

This year in the fall economic statement we actually set out most of the significant tax changes on October 30, 2007, in that economic statement, and the budget document itself was much, much smaller.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

In 2006, did you have to call upon an external firm? If you did, for 2006 and 2008, were there calls for tender? If not, and everything was done internally, would that not indicate that the department had the necessary skills to do the work?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Well, no. As I said in my opening remarks, it's common for federal finance ministers to bring in temporary staff for budget purposes. That actually saves money, because otherwise one would have to bring the people on board full-time, and they'd be entitled to severance and all the rest of it as full-time employees. That's one thing.

On tendering, the only contract I know of related to that was the MacPhie & Company contract.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

You're telling us that for Budget 2007, given the complexity of the fiscal imbalance and how difficult it is to explain to the general public, you needed to hire an external communications firm with four staff. You needed an external company to explain to people a process which your own officials could not explain. The explanation you're giving us is difficult to understand.

Why did you deal with this company, which is very small when compared with many other communications companies that could have disseminated or prepared a far more comprehensive message? It's a bit of a contradiction.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I don't share your view that big means better in the private sector. In fact it often means more expensive, not necessarily better.

I knew Mr. MacPhie from his time at Queen's Park, doing some work for the Government of Ontario. I knew that he was reliable, certainly trustworthy, and capable. That's why he was engaged in the work.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. MacPhie told us that he never communicated with you about this contract and that everything took place at the level of the officials. From your perspective, you say that you trust this person and had recommended him.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

That's right.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

You had recommended him.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Yes. I don't know who you hire, but I like to hire people I can trust who have proven track records, who I know have a great work ethic, and who I know can get the job done.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

On that point, I fully agree with you, but there are rules of procedure that apply to ministers of Finance. Your deputy minister is the senior accounting officer within the Department of Finance. You and he both must comply with procedures and general rules. Earlier on your deputy minister, Mr. Wright, told us that he did not disagree with the idea of not having a bidding process for a contract valued at over $25,000. If he had disagreed, he would have had to submit his decision to the Treasury Board Secretariat, which he did not do.

I do not understand. You say that you hire competent people. Yet the deputy minister is there to remind you that you must comply with administrative regulations and he did not do that at the time. Do you find it acceptable that your deputy minister did not remind you of administrative rules which have not been followed? Earlier on, you said you were only informed of it in June 2007. How could you accept that your deputy minister did not tell you about it beforehand?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

It was July 2007.

I understand that most if not all ministers do what I did, which was delegate the administrative authority to my chief of staff in writing. I understand deputy ministers do that as well. These are large departments. I don't think, quite frankly, it's reasonable or that Canadians would want us to spend our time doing the administrative work, whether we're ministers or deputy ministers.

I delegated that responsibility to my chief of staff. I understand now that there were communications between the department and my chief of staff about some of the issues, but they were not shared with me.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I will be giving the rest of my time to Mr. Lussier.

[The Chair, Liberal, Shawn Murphy]

You have 30 seconds.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Mr. Flaherty, based on an analysis of Department of Finance contracts, over 10% of them fall between $24,000 and $24,999, whereas in other departments only 6% of contracts are worth that much.

How do you explain this discrepancy?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I can't give you any specific reason. I delegated the authority to enter into the contracts. The ones you're referring to were within the Treasury Board guidelines.