Public Accounts Committee on Feb. 14th, 2013

[Jim Ralston]

Somewhat along the same lines that Nancy just mentioned in the context of the AG's connections with international organizations, we too are plugged into a network of preparers. First and foremost, the International Public Sector Accounting Standards Board sets international standards. Canada participates in that process. In fact, Canada is the host of that organization; it's headquartered in Toronto. So we actively participate in the production of those standards; we contribute one voice among many others, but an important voice because of our experience here.

There's also a working group that is sponsored by the OECD, and we participate in that annually. Canada and the United States alternate hosting a somewhat less formal international conference where we try to share our best practices. Something that's kind of ad hoc is that just this past December I was invited to a conference in Europe that was sponsored by an international accounting firm. The subject of the conference was encouraging countries that had not yet done so to adopt accrual accounting, etc. I was invited to talk about the Canadian experience in making that advance. Our leadership is well recognized in the world.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much.

[The Chair, NDP, David Christopherson]

You're right on the money. What we'll do is we'll send Mr. Kramp to those countries and get them.... That'll fix it.

Moving along, Mr. Byrne, you have the floor, sir.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thank you, Mr. Chair.

Thank you to our esteemed witnesses for appearing before us.

I want to initiate a discussion about two statutory programs that are providing support to seniors. Looking at the public accounts, not just from this year but from several years, there is reporting of some quite significant budget variations in old age security payments and guaranteed income supplement payments. In fact, the department has quite often overbudgeted for them in the main estimates, and then in its reporting in the public accounts over the last number of years there is a balance that they have been able to give back to the consolidated revenue fund or it is to be spent in other parts of the department.

Is anyone at the table qualified to provide me with information as to whether it is unusual for a statutory program, where the payments should, I think, be considered to be somewhat predictable—given mortality rates, past usage, and other things—to have a wide variation in estimates budgeting versus final reconciliation through the public accounts?

[Jim Ralston]

In general, I would say that in the main estimates statutory programs are forecast and there are updates throughout the year. We may see one forecast in the main estimates; we may see updates to those forecasts in supplementary estimates, and we may see updates to those forecasts in budget documents. It is fundamentally a forecast, as you said, and the actuals will invariably differ from the forecast. Now, by what margin is another matter.

In terms of a specific program and the forecasting methodology that goes into those programs, I would not be able to answer that question. I think you'd have to refer it to the department that administers those programs, unless one of my colleagues can offer something.

But I think that's a question you'd best address to the department.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Thanks very much.

The Treasury Board Secretariat has asked for, and been granted by the president, certain exemptions in terms of its reporting. Specific details have been left out of the public accounts, and it has been explained to us as a committee why they've been left out.

I have two questions. For the purpose of clarity, without asking for specifics or details of these payments, can you, as Comptroller General, provide me with a broad-based description as to when payments to inmates have been exempted from inclusion in the public accounts? What exactly would a payment to an inmate be comprised of? What are we talking about there?

[Jim Ralston]

I would point out that in some cases names of individuals are not reported, but in terms of a description of the broad nature of the payment, it is still supplied. It's really the names that we're talking about that are not provided.

In terms of the particular program you're referring to, Tom or Sylvain, do we have something on that?

[Tom Scrimger, Assistant Comptroller General, Financial Management and Analysis, Treasury Board Secretariat]

Thank you, Jim.

The Correctional Service of Canada can make a number of different payments to inmates, and I don't know the source of all of them. They feel that for some parts of the payments a publication waiver is useful, to avoid any prejudice to the individual as the individual transitions into the community. It's the sense of not providing public knowledge on individuals who have received sums of money from the government.

I really can't give you any more detail than that.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

This was approved by the President of the Treasury Board.

Do the public accounts provide an aggregate of this figure for payments to prisoners on an annual basis? I wasn't able to find that in the public accounts.

[Jim Ralston]

I believe there is an aggregate, but we're verifying that.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Ms. Cheng, because there are these exemptions in terms of the reporting, does your office actually conduct some sort of analysis or audit to ensure that while they are exempt from public publication, they are indeed that for which they have been reported or suggested, and that you can verify that? For example, there's a broad category for non-disclosure resulting from confidentiality agreements. It's tough to establish a rules process under which something would constitute a just confidentiality agreement versus having what might be a discretionary decision to establish a confidentiality agreement. One of the things we are always concerned about is that a confidentiality agreement not be entered into simply to provide a means of cover.

Does your office provide any analysis of that, based on the specific categories of exemption from publication? Do you cover that within your audits?

[Nancy Cheng]

The information the member is referring to is not part of section 2. We audit only section 2 of volume I, so that's not actually subject to audit.

[The Chair, NDP, David Christopherson]

Sorry, time has expired.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

So it is a discretionary...? But is there a simple reference? Did you find a reference? I wasn't able to find it.

[Sylvain Michaud, Executive Director, Government Accounting Policy and Reporting, Treasury Board Secretariat]

No.

[The Chair, NDP, David Christopherson]

Of course, you'll have another opportunity coming up, Mr. Byrne, if you wish to pursue that line of questioning.

Mr. Shipley, you have the floor, sir.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, Chair.

Thank you to our witnesses.

In the public accounts, we recognize, and we're seeing, that the economy posted modest growth through 2011 and then early into the first half of 2012. We know there were reasons. My colleague raised the question of corporate tax. This is just a comment. I think it's important to recognize the strength of our economy, and why, when corporate tax, business tax, and personal tax are kept in control and there is money in the pockets of the people, it's important.

We talk about Canada's economy, and I think it's important, in terms of the accounts of what Canada does to make sure we stay healthy, to recognize that we have a responsibility to our provinces to not cut those transfers. We have done that so that they meet their obligations.

This will go to the financial folks. The stimulus phase of the economic action plan was from January 2009-10 to 2010-11. It was something the provinces embraced and endorsed with us, and we thank them for that.

We needed something to cushion the economy. Can you give us any benchmark, in fact, of how it contributed to our recovery?

[Douglas Nevison]

I think as you rightly noted, the stimulus package that you referred to, Canada's economic action plan, was equivalent to four percentage points of GDP, so it was quite significant. It was one of the largest in the G-7. As you rightly noted, it was a combination of federal support and provincial support.

Given how the Canadian economy has performed over the last few years, it's regained its pre-recession level of real GDP, and it has more than recovered all of the jobs that were lost over the recession and then some. We're now at about 400,000 jobs higher than we were before the recession.

If you look at international groups like the IMF and the OECD, which I've mentioned before, they have attributed that performance and success in part to the stimulus. Those also reflect the fact that Canada had very strong fundamentals going into the recession. It had a low debt-to-GDP ratio and a strong banking sector, so a number of positive attributes were there beforehand as well.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

You bring up another lead-in for me, and that was part of a question—and we didn't get you to go through your slides.

On page 3 you talk about the ratio of the accumulated debt to GDP as being 33.8%. I think it's also important to note that it's actually about half—and that is coming out of the worst recession since the depression of the thirties—of the peak that was in 1996, after a dip in the economy of 68.4%.

I'm wondering if you can help me understand. That's the lowest, I understand, among the G-7 countries, which are the industrialized countries. What sort of range is there in the debt-to-GDP ratios among the most industrialized countries in the world?

[Douglas Nevison]

In terms of the G-7, if you were interested in that sort of comparative range, on page 1.13 you will see the net debt level for the G-7 countries: Canada in the low thirties, ranging up to Japan at about 125% GDP. The next lowest country compared to Canada would be Germany, which is in the low fifties. Just to be clear, though, this is at the total government level, so it includes the provinces as well as the federal government, and it also includes the assets of the CPP and QPP.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Just to help me understand a little bit, and maybe some of the folks who might be listening, what does this actually mean, though? What does this actually mean to a Canadian who is looking and asking whether we are a model or whether we are still in trouble? What does that mean to the recovery of our country, in terms of maintaining a low debt-to-GDP ratio?

[Douglas Nevison]

A low debt ratio, as I mentioned, was one of the reasons Canada was able to respond as it did, again at the provincial level and the federal level, to the global recession. It gave the flexibility to provide a stimulus program without sacrificing or jeopardizing fiscal sustainability. Some of the general benefits include keeping interest rates low, which has a positive impact on investment. In terms of planning, both businesses and households can expect interest rates to remain low, tax rates to remain low, and public services to remain sustainable. So there's a certainty there from a planning perspective.

There are a lot of benefits that go along with having a sustainable debt position.

[The Chair, NDP, David Christopherson]

Sorry, Bev, we're out of time.

We'll move along to Monsieur Giguère.

You have the floor, sir.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chair.

Someone pointed something out. Even though the deficit is $26.2 billion, our debt has increased by $35.2 billion.

Can anyone explain that to me?

That comes from the Library of Parliament's briefing notes, point 9.

[Jim Ralston]

Was the essence of your question that the increase in debt is different from the amount of the deficit?