Public Accounts Committee on Nov. 23rd, 2009

[James Ralston]

I think central to your question was your observation on the reporting of losses. What I'd like to say about that is we see each year there's a certain level of loss reported that occurs in government. Again, there are a variety of reasons, some of them are accidental, some of them may be due to other circumstances. Once again, my view is that it would obviously be much better if we could reduce that sort of loss. But frankly, I think the best way to approach it, because of the diversity of the circumstances, is that when a loss occurs the department that experiences it has to look at the situation that caused it, try to address those causes, and put in appropriate fixes for it.

Once again, it's just something for which, due to the diversity and breadth of government, it's hard to prescribe a single answer. It really requires analysis of the details.

[The Chair, Liberal, Shawn Murphy]

Thank you, Ms. Faille.

Mr. Christopherson, eight minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you very much, Chair, and thank you all for your attendance today.

I want to begin by just underscoring the last sentence in paragraph 4 of the Auditor General's comments: “In our view, Canada continues to demonstrate leadership in financial reporting for national governments.”

I'm one of the quickest and loudest to jump when things aren't the way they should be, and I think it's important to acknowledge how blessed we are in Canada, especially those of us who have an opportunity to travel to other countries and see the corruption they're faced with, not only at senior government levels but right through their entire society. It's so frustrating and demoralizing and difficult for ordinary citizens in those kinds of corrupt systems. We have our challenges and we have our problems and we have our corruption, but it's not on that same scale.

I want to thank all of you who are involved in that, those who aren't in this room, who are involved in the staffing side of giving us that reputation--and hang on tight because I'm not going to do it often, but I'll give my dues to the Conservative Party while they're in power for ensuring that we've continued, and to the Liberal Party when they were in power. We do have our problems and we'll continue to face those challenges, but in the broader scheme, when you get out there and see what else exists in the world, we are so blessed in this country; we truly are.

Having said that, I'll move to some questions and take some of our challenges on.

In volume III, page 2.20, under “Public Works and Government Services”, lo and behold I see the words “Sponsorship Program”--I hear “scandal”, but I read “Sponsorship Program”. This is under “Losses of Public Money due to an Offence, Illegal Act or Accident”. We all know about the millions that were lost, some of it still not found or identified, but this is now registering in this fiscal year: $2,140,000 lost, only $32,808 has been recovered so far, and $120,000 is expected to be recovered. That leaves $1,987,192 we're not going to get back.

Is this the infamous sponsorship program, or is this something new?

[Bill Matthews]

Thank you for the question.

It is, indeed, the previous sponsorship program. The reason you're seeing new losses reported here is that sometimes when there are investigations into potential losses, they wait until they are a certain way down the path before they can actually articulate, do we have a loss or do we not? And it involves court action. In this case, there were some actions under sponsorship that were pursued this year. There are still losses being calculated. We do annually report on those losses, the new ones, as well as recoveries of the losses previously reported. In this case, the Department of Public Works and Government Services provides additional disclosure. They keep a website up to date on sponsorship recoveries and actions.

In the case we've got here...and I'm going from memory, but the reason that is reported as not being recovered is the firm or person in question has declared bankruptcy, and there's a loss there. It's just not felt likely that we will get a recovery.

[David Christopherson, NDP, Hamilton Centre, ON]

How many more years are Canadians going to continue to see the losses under this sponsorship program? Do you have any idea?

[Bill Matthews]

I can't say. It depends. The actions are still before the courts.

[David Christopherson, NDP, Hamilton Centre, ON]

But it is going to be ongoing years that we're going to continue to see this?

[Bill Matthews]

I'd say for a couple of years, yes.

[David Christopherson, NDP, Hamilton Centre, ON]

I'm looking at volume I, page 11.9. This is “Transfer Payment Agreements, Fixed Assets, Purchases and Operating Leases as at March 31, 2009”. In every single province except one, Mr. Chair, which you'll find interesting.... It names the governments. For the Government of Ontario, for example, at the bottom of the page, under “Building Canada Fund—Communities Component”, it shows $362 million was the estimated cost, with $362 contracted and nothing spent. I found nothing spent for every province except P.E.I., which managed to spend $1 million out of the hundreds of millions that are here.

Can you tell me why there's so much money being teed up for communities but it's not being spent when we need it?

[Bill Matthews]

In this case you're dealing with the fund, and there are negotiations involved between the federal government and the provinces. So setting aside the amount is the first step. Then there are detailed negotiations that allow you to actually proceed to spending, and those are often time-consuming and delayed. It's once those agreements are reached that you'll actually see some spending take place. It takes some time.

[David Christopherson, NDP, Hamilton Centre, ON]

You know, under normal circumstances I'd probably accept that and move along. But in this case, the government and all the opposition parties and the public and every mayor and every premier have been talking about things being shovel-ready, getting the money out the door, getting the stuff going where you can without doing any damage, accelerating procedures to get the paperwork going. I'm led to believe that of all the governments we have in Canada and all the bureaucrats and all the politicians, the only province that managed to get something done and actually had money go out the door was little P.E.I., to the tune of $1 million.

That's the best this government could do in this kind of crisis?

[Bill Matthews]

I can't speak for the department in question, but remember this is as of March 31, so the bulk of the spending under the economic action plan will occur in the current year and the next fiscal year. So if you're referring to those projects, this was at March 31.

[David Christopherson, NDP, Hamilton Centre, ON]

Fair enough. I'm not going to belabour it. I know you can only say what you need to say. But I have to tell you, given the priority and the importance, if we saw small amounts, I would think I could buy into it. But there's nothing in any province except P.E.I., which managed to get $1 million. So with all that money and all that talk, we ended up with $1 million in one province. Something is not right there.

Anyway, moving on, for as long as my time holds, to volume III, page 2.34, this caught my eye. This is under the category of “Losses of Public Property due to Accidental Destruction or Damage”. Under Transport, the damage to hopper cars is $53 million, and $40 million of that is not going to be recovered. Now I happened to look over at National Defence, where I expected to see a huge number...and I realize this is accidents, and I would assume most of their damage is not necessarily by accident; somebody wanted to do the harm. But still, with all the equipment they're moving around and all the potential for ordinary human.... They don't have a number anywhere near that. They don't have one line item that breaks $1 million. But hopper cars are costing us a loss of $40 million a year plus.

Can you help me understand why?

[Bill Matthews]

That one I can, because it caught our eye as well.

[David Christopherson, NDP, Hamilton Centre, ON]

I'll bet.

[Bill Matthews]

This is an error, from the department's perspective. What happens here is there are hopper cars leased to CNCP, and if they're damaged there's a settlement. The loss has been incorrectly calculated here by the department. So CNCP reimburses the government for a certain amount based on the book value of the hopper car. Because of the nature of their use, hopper cars are more subject to damage than your average rail car. In fact, it was not a loss. It was actually a gain of $3 million in terms of the compensation they received. So there were hopper cars damaged during the year, but the amount compensated to the government was actually in excess of the book value. So it was an error.

[David Christopherson, NDP, Hamilton Centre, ON]

But it does beg the next question, which is, when did they find that out?

[Bill Matthews]

They found out they had reported an error in the last week, when we asked the same question.

[David Christopherson, NDP, Hamilton Centre, ON]

I wonder if I can just close this, Chair, please.

[The Chair, Liberal, Shawn Murphy]

Yes, go ahead.

[Bill Matthews]

When did they find out they had reported an error?

[David Christopherson, NDP, Hamilton Centre, ON]

Yes.

[Bill Matthews]

In the last week, when we asked the same question.

[David Christopherson, NDP, Hamilton Centre, ON]

And my question to the Auditor General is whether there is not some requirement for department heads to let us know when there's something wrong in the printed document that's especially this big, prior to our sitting here and deliberating.

[Bill Matthews]

In something this thick, we do from time to time discover errors. Once the department finalizes the numbers, we do post updates on the Public Works and Government Services Canada website.