Public Accounts Committee on Nov. 16th, 2010

[The Chair, Liberal, Joe Volpe]

Mr. Campbell.

[Ronnie Campbell]

Yes, Mr. Chairman. It was put in place appropriately and it did help expedite the economic action plan.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

Now, the TBS, the Treasury Board Secretariat, conducted an internal audit on the management of this vote 35. Will you explain to the committee why you were able to accept the internal audit and what its findings indicated? That question would be for the Office of the Auditor General.

Gordon Stock.

[Gordon Stock]

Thank you, Mr. Chair.

This is one of three audits, internal audits, that we were able to rely on. Being able to rely on an internal audit is something that is under the provisions, under the standards, of the Canadian Institute of Chartered Accountants. We follow a very rigorous process in being able to make sure not only of the expertise of the individuals...the conduct of the work was done in such a way that we can include that work as part of our own. So this is an area where the internal audit community has greatly advanced in recent years.

[Andrew Saxton, Conservative, North Vancouver, BC]

Is this the first time that the OAG has accepted an internal audit from a government department?

[Gordon Stock]

This would be the first time that we have been able to fully accept three audits in the same report.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you.

Mr. Chair, how's my time?

[The Chair, Liberal, Joe Volpe]

You have about another minute and a half, together with responses.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

Paragraph 1.22 says, “We found that the programs we examined were designed in a manner to allow for timely implementation while maintaining suitable controls”.

What are some of these controls that were put in place? Perhaps Mr. Stock can answer that.

[Gordon Stock]

Thank you, Mr. Chair.

The types of controls that were put in place are whether or not authorities are followed correctly, whether or not the applications are received and completed in a manner that meets all the criteria of the terms and conditions of the programs, and that before any funds are disbursed different requirements and authorities are met as well.

[Andrew Saxton, Conservative, North Vancouver, BC]

Finally, would you say that there was a coordinated effort between departments and central agencies when it came to designing these programs?

[Gordon Stock]

Yes, there was.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

Thank you, Mr. Chair.

[The Chair, Liberal, Joe Volpe]

Before we go to the second round, I want to give Mr. Rochon an opportunity to elaborate on the response Mr. Smith had been preparing for Mr. Allen. I think it was a question about the jobs and the macroeconomic model associated with them.

Perhaps you'd like to comment on where the number of 130,000 came from and how that's affected by the provincial contribution to the program.

[Paul Rochon]

Indeed, some of the issues you just raised are quite pertinent. I guess there's a series of issues.

First, we were looking in terms of infrastructure projects at a wide number of project proponents, each of which may have their own view as to what constitutes a job. Is a three-month job a job? Is it a third of a job, for example? We had no assurance that the job numbers reported would be at all consistent between one proponent and another, and to get consistent data would have taken considerable resources. That's one.

Two, many of the job impacts related to the action plan of course weren't directly related to projects per se, but involved things like tax reductions, increased EI benefits, and other benefits. Those were as equally important in job creation as some of the project-level data.

So we came to the view that in terms of both value for money and expediency, it was better to rely on a model-based macroeconomic approach that could provide a global overview of all the job impacts of the entire program, as well as the indirect impacts that are significant and of course will not be picked up by the reports one would get from individual proponents.

I think by and large our approach has been.... This is always clearly an area of judgment, but I think by and large it's fair to say that the approach we've taken has been, first, consistent with that taken by the U.S. administration. In fact, the Government Accountability Office in the United States has subsequently raised a lot of the issues that we identified with regard to getting project-level data.

I'd also point out that we submitted our overall macroeconomic assessments to a group of private sector forecasters and economists to get their sense of whether they thought what we had done was reasonable, and by and large they indicated that they did.

[The Chair, Liberal, Joe Volpe]

Okay, Mr. Rochon.

Monsieur D'Amours, for the second round of five minutes each.

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

Thank you, Mr. Chairman.

My first question is for the people from the Office of the Auditor General. This first report looks at the work that has been done. Could it be said that your findings in this report don't necessarily apply directly to what will be in your next report to be released in the fall of 2011? Is that correct?

[Ronnie Campbell]

Thank you for the question.

Mr. Chair, I wouldn't say there was no relationship between them. In the first audit, this audit here, we audited the design, the delivery, the launching, and the paving the way to get the programs financed. In the second audit, we will be looking at how that played out and how that happened. But there certainly is a link between the two of them.

We hope that one of the benefits of auditing on the timely basis that we have done--i.e., now, rather than after the program is completed--has allowed us to identify what we think are risks that the government should pay attention to, namely, the risk of some projects not being completed. So we've identified that risk in this audit and we'll go back in the second audit and make a determination on just how many of those projects didn't get completed.

So yes, they're two different audits, but I think they're quite closely related.

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

I understand that there may be some resemblance, but still, there is a difference between setting up programs and monitoring and enforcing the rules while the work is being carried out and the money is being spent, etc. There is still a line between the two. Do we agree on that?

[Ronnie Campbell]

Absolutely. I agree.

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

Fine, thank you.

In connection with what you said earlier, Mr. Campbell, about jobs, we received an action plan from Treasury Board Secretariat, an action plan on the economic action plan. We got the email at 9:30 this morning. I wouldn't say this was done over coffee this morning and then sent to us. I wouldn't go that far. However, I have to say quite frankly that reading the responses is one thing and understanding what you are trying to do is quite another.

Take recommendation 1.69. The idea is to determine the impact, what the actual impact is. It's not about coming along and “chucking” money left and right and creating an economic stimulus package to put people to work. We also want to know what impact this will ultimately have.

Then it says in the “Actions and Timelines” column that “the Department of Finance continues to monitor the impact”. Let me tell you, that doesn't do much, nor does it give the impression that you know the actual figures and what this has done directly for the economy.

I would like to come back to what you said earlier, Mr. Rochon, about your macroeconomic analysis to determine the number of jobs that will have been created. You were aware of the recommendations of the Office of the Auditor General. But I don't know how you are going to be able to monitor the impact of the economic action plan since you have already decided to use macroeconomic analysis to determine how many jobs will have been created by the economic stimulus package.

To put it bluntly, coming up with an action plan on the economic action plan is a pretty weak response. I don't know what you were hoping to accomplish by writing these three responses for us and then sending them to us at the last minute. I wouldn't be surprised if some people were embarrassed about sending this to us, because there are no concrete results in it. There are things that are asked for, there are things that are...

Do I have any time left, Mr. Chairman?

[The Chair, Liberal, Joe Volpe]

No.

I will give you 10 or 15 seconds to answer, Mr. Rochon.

[Paul Rochon]

In terms of assessing the impact of the economic action plan, when the government announced the plan in 2009, we attached our assessment of the anticipated impact to the budget document. Then, in Budget 2010, we published an update to that same assessment to say where things were at. Very recently, in the Sixth Report to Canadians, we included another economic impact assessment. The work being done and that will be done on economic impact, on the output or jobs, is fairly well established and has been published three times already.

Similarly, we will be updating that work, using as input all of the data from departments on actual spending. And as I said before, our approach was validated by private sector economists, who...

[The Chair, Liberal, Joe Volpe]

Perhaps we can come back to it later, Mr. Rochon.

[Paul Rochon]

Sure.