Public Accounts Committee on Feb. 5th, 2009

[Rod Monette]

That's a very good question. In fact at one time there was a thought that maybe we could actually have the statements done in three months, in which case they would be done in June. And of course they have to be tabled in Parliament, so you either make it before the summer recess or if you don't hit that deadline you're basically into September. And typically, if you look at the last nine years, for example, we've had two years when they were signed in July, three years when they were signed in August, and four years when they were signed in September. So you know it has varied.

My own personal view is that given the complexity of government, and now that we're doing all the big accruals that we do—things like inventory at National Defence, some of which is in Afghanistan and is a $5-billion or $6-billion figure—I honestly think it would be very difficult to beat the summer recess. I mean, maybe we could do it in July, but even then it wouldn't be tabled until that point in time when you came back.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

I'm done, Mr. Chairman. Thank you.

[The Chair, Liberal, Shawn Murphy]

On that point, it's my understanding, when I look at what goes on in the rest of Canada, that the federal government is ahead of most of the provinces. I think some of them don't table until December or January of the following year.

[Rod Monette]

Yes, thank you, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Mr. Saxton.

[Andrew Saxton, Conservative, North Vancouver, BC]

My first question is in reference to the question of my colleague Mrs. Crombie regarding paying down debt versus having a contingency fund. In your humble opinion, which do you think is more fiscally responsible, to have a contingency fund where you're earning a deposit rate of interest, or to pay off debt where you're saving the borrowing rate of interest?

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Mr. Saxton, we used to do both.

[Rod Monette]

I hope you don't feel I'm not being direct, but that really is a policy question for the ministers to decide, and I don't feel it would be right for me to comment on it.

[Andrew Saxton, Conservative, North Vancouver, BC]

That's okay. I just wanted to get the question on record. I didn't expect an answer. Thank you very much.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Could we get on record the answer that we used to do both?

[Andrew Saxton, Conservative, North Vancouver, BC]

Well, very little of one, but that's another issue.

Can you expand on the implementation of the financial management governance, which is due to come into effect on April 1?

[Rod Monette]

Yes, I think this is a really good thing, and I have to give the credit to my predecessor, Charles-Antoine St-Jean, who some of the individuals here--Mr. Murphy, Mr. Christopherson--would have seen at committee. He started the policy of having chief financial officers.

We've always had the senior financial person, but we started off with this policy of having very strong qualifications, requirements around experience, education, and so forth. I feel that the community now is strong. I'm not saying that everybody has to be an accountant necessarily, but we talk about our tier-one big departments--that's about 95% of the money. There are 22 or 23 of them. Out of all of those, I think every chief financial officer has a professional accounting designation, many of them coupled with MBAs. I think the one who doesn't has appropriate business experience. So the qualifications are there.

The other big part is that what this policy really says is that the chief financial officer is an important person around the table, just like in the private sector. They have to be part of the decisions and part of the operation, be responsible for risk management and all those important things. I think that has happened really well and has been well received.

The other part is something that this committee did around supporting the notion of accounting officers. The deputy ministers now who are accounting officers need that, and they know they need that. So it's actually worked very well.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

That's it for my questioning, but Mr. Chair, with your permission I would share part of my time with my colleague.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, colleague.

We've dropped our debt by roughly $135 billion, and obviously it's a credit to successive governments for doing that. But a lot of people are really concerned about what's going to happen as we go through a downturn and we accumulate some deficit. Of course, generally the health of the governance of a country, the financial position.... A lot of people see the barometer as basically the debt to the GDP, or the deficit to the GDP. Some people automatically assume that if we spend $60 billion, $70 billion, or $80 billion worth of debt, we've gone dramatically behind. They don't recognize the fact that the GDP in most cases has been steadily growing.

With the basic projections that you have now in front of you, assuming that we come up with an accumulated debt of $50 billion, $60 billion, or $70 billion over the next one, two, or three years, have you done any slide measurements as to how this would affect the debt-to-GDP ratio?

[Rod Monette]

Thank you.

This is actually information that the finance department has prepared. Again, I'm going from my recollection of the presentation that I saw the Deputy Minister of Finance provide. I would ask my colleagues to clarify this after this meeting and let you know if I don't have this quite right. My recollection is that our debt-to-GDP ratio was 22%. I believe I recall that figure. Over the next couple of years, if I remember correctly, it was going to go up to somewhere around 29% or 30%, but after five years, because the economy will start growing again, it would come back down to that approximate level.

That's my understanding. It will grow for a couple of years. A number of economists are projecting a few years out that things are going to get good again and come back, and it would come back down.

I think this is also worth noting, and again, my understanding is that if you look back to the nineties when that ratio was very, very high--I don't have the figures--and compare that to now, the main reason it came down was the growth in the economy. There was some reduction in debt, but the growth in the economy was the big factor. I think the growing economy will be the significant factor.

I'll turn to my colleagues to see if they have any different figures on this.

[David Christopherson, NDP, Hamilton Centre, ON]

That would create a little bigger gap.

[Rod Monette]

When the GDP goes down--

[David Christopherson, NDP, Hamilton Centre, ON]

Then your debt ratio goes up and your debt load goes up.

[Rod Monette]

That's right.

[The Chair, Liberal, Shawn Murphy]

That, colleagues, is the end of the second rotation.

I have a quick question to Mr. Monette. On the system of internal audit, every department was to be compliant by what date? What is the compliance date?

[Rod Monette]

By April 1 of 2009 they are to have all of their committees in place, so that's about two months away.

[The Chair, Liberal, Shawn Murphy]

I think you may have addressed this before, but do you expect every department to be compliant by that date?

[Rod Monette]

The latest I've heard is that 42 out of 46 will have their audit committees up and the three or four that won't will be a month or two after that. So it will be pretty close.

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

At this time, I'm going to ask for any concluding or final remarks, starting with you, Mr. Wiersema.

[John Wiersema]

Thank you, Mr. Chairman.

Perhaps I just will briefly refer to my opening statement again.

Once again, congratulations to the government on a good set of accounts. This is ten years of successive clean opinions from the Auditor General's office.

We encourage the government to continue to work on the revenue numbers. The revenue numbers are the biggest estimate and the hardest to get right for the public accounts, both the total revenue estimate and methodology for the total revenue estimate, as well as the allowance for doubtful accounts. There are big numbers there, and we encourage the government to continue to work on those.

On departmental financial statements, we're moving forward slowly. We encourage the government to continue to make sure that departments move forward for audited departmental financial statements, not only because we think it's better information for Parliament, but because it's going to drive better controls, better systems, and better information for ongoing management of the department.

Finally, with respect to accrual appropriations, with all due respect to my colleague here, the issue has been under study for a long time. I believe the Auditor General first raised it, as Mr. Kramp indicated, in 2004. We are now in 2009. We still haven't entirely figured out the way forward. I take the Comptroller General's point that we need to move cautiously and carefully, but it shouldn't take quite that long, in our opinion.

The final comment, Mr. Chairman, if I may, is that Mr. Timmins has been in charge of the audit of the Public Accounts of Canada for some four or five years now. He's announced that he'll be retiring this summer, so next year Mr. Timmins will not be here to represent the office on the public accounts audit. On behalf of the office, I want to thank him for all the work he's done on this audit--