Public Accounts Committee on Nov. 16th, 2010

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Rochon, what you are telling me is that everyone working in the construction industry would not have had jobs during the two years of the economic action plan. That is what you are suggesting.

[Paul Rochon]

No, not at all.

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Some 200,000 workers did not become newly unemployed. Some people were already working in construction and continued to do so during those two years.

I want to know how many jobs were really created as result of the economic action plan.

[Benoît Robidoux]

We cannot give you a direct answer to your question; no one can.

Coming back to the construction sector, and in order to give you some more information on the number of jobs created and maintained, I would say that the decrease in employment in the construction sector was quite marked during the last recession in the 1990s. At the time, the number of unemployed in that sector increased considerably, and it took quite a while before things recovered. This time around, we had a relatively significant decrease, albeit less so than during the recession in the 1990s, and the recovery has set in much faster.

There is a distinction to be made. Are we talking about jobs that were created or jobs that were not lost? It is a bit of both. The same person might have experienced the two, i.e., he might have changed jobs during that time, maintained his job during the first year and found a new one in the same construction sector the following year—a job he would probably not have found were it not for the economic action plan.

We simply cannot give you a direct answer to that question. Things will have been different for each individual. When comparing the periods, we see that...

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Robidoux, that is exactly why it is important to know the impact the economic action plan has had.

[The Chair, Liberal, Joe Volpe]

Mr. D'Amours, I am afraid your time is up.

Mr. Richards.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you.

Thanks to all of you for being here today.

At the risk of sounding like a broken record, I suppose, I do think this needs to be said. Certainly I offer my thanks as well to the department for the great work you did in getting this stimulus money implemented and out quickly.

By all accounts,certainly, it has been an unprecedented undertaking, one that has been lauded all over the place as a very important aspect of the action plan that our government came out with, one that has been very helpful in bringing our country through a very tough time, and one that has provided an enormous amount of benefit to municipalities all across the country. Certainly I offer my congratulations to you on a very great job in getting this done.

Now, I think it also needs to be said that the willingness on the part of the department and the officials to work with various municipal partners in terms of being able to help them, in supporting them and providing advice and support, has been invaluable. I can speak to just one example from my riding, and there have been a number of them, because I've heard from a number of my municipalities as I've kept in touch with them to find out how their projects are coming along. Over and over, I've heard from them great things about the work they've had in terms of dealing with the department. They've been very pleasantly surprised by how open the department has been in working with the municipalities. I just wanted to pass that along to you, because I've heard it time and time again.

I think there were really two aspects to the infrastructure funding that were key in terms of how quickly we were able to deliver this funding, and how quickly we were able to see results for the country and for municipalities and deal with the infrastructure challenges that many municipalities have. I know that in my riding, Wild Rose, which is near Calgary, Alberta, we certainly have had a number of challenges that we've had to deal with, and this has been very, very helpful to a lot of municipalities. They've been very thankful for what we've been able to do and how quickly it has been done.

I think there are two aspects. The first one is how quickly we were able to work with our provincial and municipal partners in order to get projects started. I only have to look back to the previous Liberal government's infrastructure plan that they put forward in 2003, which was called the municipal rural infrastructure fund, to see an example that certainly didn't happen nearly as quickly. That was announced in budget 2003 by the Liberal government and it took three years to negotiate and sign agreements with all the provinces and territories. It's a very big contrast to what we've been able to do.

Then you look at the spending that happened under that program. In the first year of the program, 2003-04, zero dollars were spent. In the second year of the program, 2004-05, again zero dollars were spent. The third year of the program, 2005-06, had nearly the same result: $418,000 out of a fund of $1 billion fund, or less than four one-hundredths of a per cent, was spent in that third year.

So obviously there was some unprecedented and very quick work by the department and our government to deliver this funding.

The second aspect was, I believe, being able to be clear with our partners in the provincial and municipal governments in terms of their understanding of the commitments that needed to be made to ensure that this happened quickly, in making sure they understood there was a deadline to the completion of the projects, and in working with them to try to find ways to help them complete the projects in time. I've certainly heard many examples from my municipalities about the department doing just that: being very clear with them about the deadline and making sure projects could be completed in time.

I'd like to hear from the departmental officials. How important do you feel that aspect was in terms of being able to get these projects completed quickly?

[Yaprak Baltacioglu]

Defined timelines definitely helped, but also, the country—well, the whole world—was in serious recession, and the anxiety around that actually brought about a lot of concrete action.

[Blake Richards, Conservative, Wild Rose, AB]

Thank you.

Do I have some time left?

[The Chair, Liberal, Joe Volpe]

You have five seconds.

[Blake Richards, Conservative, Wild Rose, AB]

Okay. Well, I guess we're done there, then.

[The Chair, Liberal, Joe Volpe]

Thank you very much.

Madam Baltacioglu, I just wanted to go over something, if you don't mind. You gave us an indication that your department had received some 6,300 projects that it approved. You didn't say how many were not approved. That works out to about 20 projects per riding around the country. I just want to give an indication of the dissemination; I don't know whether it was that. It's immaterial.

But that would suggest that the department had struck a strategic view of what needed to be approved or not. Since you approved I guess about 99%, I'm wondering what that strategic view might have been.

[Yaprak Baltacioglu]

Well, the program funding was allocated per province on a per capita basis, so the strategic view was basically the reality of where the population is and where the needs are.

So the rest of it was.... We have an application process. The provinces kept on applying. We already had some applications, so we showed flexibility across the country because we had to expedite the program and the intake. We had some projects under the Building Canada Fund's communities component; they were already there, ready to go. So we used those and worked with the provinces to see if they were the priorities.

I don't think we had a particular “this is how many we will fund in such an area”.... It was basically that priorities were set between us and the provinces--and municipalities in some cases. I don't have an average per riding. I don't have that kind of information.

[The Chair, Liberal, Joe Volpe]

I really wasn't going there.

[Yaprak Baltacioglu]

Basically it was an allocation across the country on a per capita basis. That's what we did.

[The Chair, Liberal, Joe Volpe]

Mr. Rochon, if I could go back to some of the numbers that Mr. Allen tried to get you down on, I think several said that the basic rationale was “shovel ready”. It was a word that I think several of you used. A shovel-ready project would indicate typically that the financing was in place, would it not?

Mr. Rochon, you're the guy in Finance, so I'm just wondering from a Finance point of view....

[Paul Rochon]

It depends on what you mean by financing. I would say that a shovel-ready project means that the project is well scoped out and most of the approval processes have been gone through, but I would have thought the financing was the last thing, actually, that would take place. But I'd leave it to my colleague in Infrastructure to follow up.

[The Chair, Liberal, Joe Volpe]

Well, maybe he could, but I just want to come back down to that for a second, because I think all of us are interested in making sure we get value for money.

So if the projects are shovel ready and all the programs are scoped up, and all that's required is an application by the provinces, as we gathered today, to come to the federal government to engage in a program whereby the financing flows to a program that had already been scoped out prior to being stimulated, was the process checked out for whether it would fit the general intentions as put out in the action plan in terms of stimulating additional numbers or actually saving some numbers that would have to be very specific? I didn't get the specificity from you.

[Paul Rochon]

Oh. Well, prior to the action plan being put in place, we gave some thought to how best to design such an action plan. Even with shovel-ready projects, there clearly are certain delays that one will encounter in getting these things under way.

So the formulation of the plan was to have a mix, basically, of tax measures that could be put in place right away and increases to employment insurance benefits that would have an immediate impact, combined with a whole series of infrastructure and construction types of projects that ran the gamut from, as you know, social housing to municipal infrastructure.

And yes, a main criteria was that these projects be shovel ready or something close to it, and we spent a lot of time with departments prior to the budget ensuring that we had a reasonable menu across all the elements of the action plan.

[The Chair, Liberal, Joe Volpe]

Thank you, Mr. Rochon.

I'll finish off with this one. I will go back to chapter 1 and page 8, your two processes and the delineation thereof, because you said “prior to the budget”. I think this is fairly easy to get, but I don't see, for example, on the bottom part of that chart, an arrow going back and forth between “Memoranda to Cabinet” and “Treasury Board submission”, nor one from “Policy approval” to “Financial approval”.

It would suggest that there needed to be some coordination between that first step, “Memoranda to cabinet” and “Treasury Board submission”; they're concurrent. Does that mean the same application went to both levels here at the same time? And was there a secretariat that monitored what the decision process was between the two?

[Alister Smith]

Perhaps I can try to address this. The memorandum to cabinet is intended to get the policy authority and the submission to the Treasury Board is eventually to give the financial authority. The two have to work together.

Essentially, the TBS submission is the implementation of the policy authority. We have to know on the Treasury Board side exactly what's coming through in the memorandum to cabinet--what's in the design and what's in the policy--in order to write that submission, that précis for submission, and prepare ministers to make a decision on the funding.

So we do work closely together. It does require intense coordination, I would say, between the Privy Council Office and Treasury Board to make that happen.

[Bill Pentney]

Mr. Chair, if I can add to that, there was a deputy ministers steering committee and a series of specific SWAT teams, if you like, of subcommittees of deputies to ensure that coordination. So among the central agencies, with the key departments, and, frankly, with the engagement of ministers as well, it certainly was an intense period in terms of ensuring that this was well coordinated. But there was a deputy ministers steering committee to try to ensure that kind of coordination.

[The Chair, Liberal, Joe Volpe]

Thank you.

We're about at the end, but I'm going to give Madame Faille an opportunity.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

In fact, I would like to give the floor to Mr. Campbell, from the Office of the Auditor General.

You have heard what the departments have said regarding the report. Are there any points you would like to clarify?

A little earlier, the chair said that he would have liked to hear about such issues as the level of project preparedness in terms of their financing. In conducting the audit, you addressed the issue of insuring timeliness, complying with eligibility and legal requirements, assessing and responding to risks and reporting to Parliament.

Our researcher has sent us a letter from the Auditor General to Treasury Board. In that letter, your office sets out more specifically its expectations with regard to the upcoming audit. It would have been interesting to include that in the report in order to better appreciate the next stage, more particularly with regard to the weightier elements such as accountability, the management framework and compliance with financial legislation, namely the level of compliance with sections 32, 33 and 34 of the Financial Administration Act.

In drafting your final report, you normally would negotiate with departments. It seems to me that the answers that we heard today contained certain contradictions. I would like to know whether some of the elements in the interim reports were changed, in essence, before the final report stage.

[Ronnie Campbell]

Merci.

Thank you, Mr. Chair.

Let me just be as clear as I can that we don't negotiate our audit reports with the departments that we audit. We go through a rigorous process and an appropriate process and a professional process to show the facts upon which we're basing our conclusions and make sure that the department in question has the opportunity to engage us in a discussion on those facts.

If there are facts that they have that we have overlooked in any way, then we clarify it, and we amend our report appropriately based on the facts. But these are our reports and we stand behind every word in them. I just want to say that on the question of negotiation.

I'm not sure what the contradiction might have been that the member is referring to. I think it's probably important to re-emphasize that very often we audit something after it's done, and what we've done in this case, Mr. Chair, is audit something while it's in motion. So we're not in a position to say that projects were not completed in time.

An audit of this nature identifies risks. Given some of the things that we've seen, we think there are risks in place, particularly in relation to completion. Government departments are clearly on top of that and they're trying to monitor it. As for how that pans out, we'll see when we report in our next chapter. But we're very comfortable with the process we've been through in this audit and we think we've reflected our findings appropriately in the audit report.

Thank you.