Evidence of meeting #41 for Public Accounts in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was billion.
A recording is available from Parliament.
4:05 p.m.
NDP
David Christopherson NDP Hamilton Centre, ON
Fair enough, but for a $50 million mistake or a $40 million mistake, I would have expected, given the sophisticated level of all of this, that somebody would have had a note on our desk saying, “By the way, on page so-and-so, we really didn't lose forty million bucks.”
4:05 p.m.
Assistant Comptroller General, Financial Management and Analysis Sector, Treasury Board Secretariat
And we will do that once we finalize the actual number.
4:05 p.m.
NDP
David Christopherson NDP Hamilton Centre, ON
With great respect, that still doesn't help us for the purposes of this meeting.
Thank you, Chair.
4:05 p.m.
Liberal
November 23rd, 2009 / 4:05 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you, Mr. Chair.
I'd like to begin by welcoming our witnesses, and a special welcome to Mr. Ralston, who appears before us for the first time in his new role as Comptroller General. Thank you for coming today.
My first question is for the Auditor General. I'd first like to echo the praise that my colleague Mr. Christopherson has for you and for our system. We are indeed very fortunate to be living in a country like Canada.
Now, Madam Auditor General, you mentioned that for the eleventh consecutive year the government has received a clean audit opinion on its summary financial statements.
Can you please comment on what this means? And how does Canada stack up against other countries?
4:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Thank you, Mr. Chair.
I would say this is a very significant achievement. First of all, there are very few countries that actually receive what we call a clean opinion. In many cases the auditors have some difficulty in certifying the accounts. As well, there are very few that have as long a history, if you will, of clean opinions. That is why we really do believe that the Government of Canada is a leader internationally in its financial reporting, especially since the government is doing its accounts on what we call the accrual basis, not the cash basis, which makes it even more difficult to do a lot of the estimations and to do a lot of the numbers that go into the accounts. So it is a very significant achievement.
4:05 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you.
My second question is also to you, Madam Auditor General.
In the past you have raised concerns about Treasury Board policy and how it relates to your office. You have stated in this committee that you have been working with Treasury Board to clarify these policies. On September 18, the President of the Treasury Board wrote a letter to this committee regarding amendments to enhance the independence of agents of Parliament and to clarify respective rules and responsibilities. This appears to be a positive outcome.
Madam Fraser, are you pleased with the dialogue that you had with Treasury Board and the resulting changes?
4:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Thank you, Chair.
We are very pleased with the way that project was handled and the results. As I mentioned to the committee—and when we have the hearing on our report on plans and priorities, we will go into this perhaps in more detail—there were a number of clauses or provisions in Treasury Board policies that applied to officers of Parliament, which we felt were inappropriate. There was a review of those policies. Many of them have been corrected. I would add, though, that we are still not completely satisfied, because the communications policy has yet to be addressed. But many of the other policies have been addressed and we are very pleased with the progress that has been made.
4:05 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you.
On page 2.34 of the public accounts, you mentioned that you are “...pleased to note that...the Public Accounts includes a discussion about the economic stimulus commitments made during the fiscal year....”
Can you comment on this, since you did mention it in your observations? Can you also explain why you're pleased?
4:05 p.m.
Auditor General of Canada, Office of the Auditor General of Canada
Thank you, Chair.
As I noted in my opening comments, most of the programs and initiatives that the government took under the economic action plan would not have an effect in the year ended in March 2009. There is some disclosure in the statements, but the bulk of the transactions and the more significant transactions will occur in the current year. I think given all of the attention that was being paid to the economic action plan, we were very pleased to see that the government has made this disclosure and is giving Canadians some indication of the spending that will occur over the next three years so that they understand how that is rolling out, if you will, and the fact that there is very little in the statements for March 2009.
4:05 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you.
My next question is for the Department of Finance, Mr. Rochon.
We have heard repeatedly that Canada's fiscal position remains the best in the G-7 and how this fiscal advantage will serve Canada well in the years ahead. I understand that the IMF is projecting that Canada's total government net debt-to-GDP ratio will reach 28% this year.
Can you compare that with our partners in the G-7--the U.K., the U.S., Germany, France, Japan, and Italy? Where do we stack up in the G-7?
4:10 p.m.
Senior Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Currently we have the lowest net debt ratio by far in the G-7. As you indicated, the IMF projects that while our debt ratio will go up somewhat—it's in the order of five percentage points measured in relation to gross domestic product—that's really quite a small increase compared to the massive increases that are taking place in virtually every other G-7 country. It's perhaps small comfort that we're doing better in a relative sense because other countries are doing worse, but that is definitely the case.
4:10 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
How does that look for the year 2014? What is the trajectory for Canada's net debt by that year?
4:10 p.m.
Senior Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Canada's net debt through 2014 will be only slightly higher than it is now. Again, what we're talking about here is the total government net debt, so it is the combined federal-provincial net debt, plus the balances in the Canada and Quebec pension plans. It's calculated that way so we can compare across countries, many of which are unitary states. I'm going from memory, but my recollection is that our net debt will be in the order of 34% of GDP on a total government basis in 2014 in Canada.
4:10 p.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
How does that stack up against our partners in the G-7?
4:10 p.m.
Senior Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
They would have debt ratios that are considerably larger than ours. I don't have that data right off the top of my head.
4:10 p.m.
Conservative
4:10 p.m.
Senior Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
We're doing well, and we're well below anybody else.
4:10 p.m.
Conservative
4:10 p.m.
Liberal
The Chair Liberal Shawn Murphy
Thank you, Mr. Saxton.
The clerk has just informed me that there is going to be a vote in the House on a procedural motion, so what I propose to do is just continue on until five minutes before the vote. It's only one vote. At that time we'll suspend for a 15-minute period and then continue the meeting after the suspension. I just wanted to let you know that. We'll let you know how we're getting along timewise.
We can start round two.
Ms. Crombie, you have five minutes.
4:10 p.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Thank you, and welcome to our guests, especially Mr. Ralston.
I've got quite a number of questions, so just giving really short answers is fine.
I do want to ask about the shift in our position, because in 2007-08 we posted a surplus, as we know, of $9.6 billion. Then there was a $15.4 billion shift and now we find ourselves in a $5.8 billion deficit. Does that concern you? What factors led to that, because that was sort of pre-recessionary planning?
4:10 p.m.
Senior Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Why don't I speak to that from the Department of Finance's perspective.
In large measure, the deficit in 2008-09 reflects the onset of the recession. You see that when you look at budgetary revenues, particularly the large drop in corporate income tax revenues. You'll recall that the global recession really accentuated in the last quarter of 2008 and the first quarter of 2009. Canada and other countries experienced very sharp declines in both output and incomes, and that fed through directly into our revenue base.
4:10 p.m.
Liberal
Bonnie Crombie Liberal Mississauga—Streetsville, ON
Thank you.
Now that the accumulated deficit is upwards of $463 billion and we know interest rates are starting to rise, what's the strategy to offset the increased costs of servicing the debt?
4:10 p.m.
Senior Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
The debt service costs are projected to rise in part because interest rates are historically low right now, but it's also because we are taking on more debt. In September, the government sent out an update where it indicated an overall general approach to return to balance, and that approach was centred on controlling spending and reducing the overall growth rate in spending.