Public Accounts Committee on Nov. 26th, 2018

[Martin Dompierre]

Mr. Chair, we asked the question and they did not provide answer. I might even be in a position to say that they are withholding information.

[Chandra Arya, Liberal, Nepean, ON]

Okay.

I'll go to paragraph 7.91 and your recommendation that:

The Canada Revenue Agency should enhance its performance indicators so that it can fully measure and report on compliance activities' results and actual collected tax revenues.

I went through the agency's response twice. Though it starts with the word “Agreed”, do you think they have agreed, and do you think the measures they have stated here meet the needs you have recommended?

[Martin Dompierre]

Basically, when we discuss this recommendation, we obtain their response specifically, and we challenge this response in order to make sure that the agency is in a position to address and take concrete actions to address the recommendations.

They committed and agreed—as you pointed out—that they would identify or enhance their existing performance indicators to better measure and report their compliance activities, results and actual collected tax revenue.

Mr. Chair, we believe that the agency committed to address the concern that we raised in the report.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Arya.

We'll now go to Mr. Kelly, please.

Mr. Kelly, you have five minutes. We're in the second round now.

[Pat Kelly, Calgary Rocky Ridge, CPC]

Thank you.

Thank you all for coming and for the work you do to help Parliamentarians execute their duties.

I'm going to go back to the opening remarks.

Regarding Report 7 on the Canada Revenue Agency, you spoke of the agency's calculations of additional revenue resulting from compliance activities, and that the agency's number did not reflect the portion of taxes written off as unrecoverable from taxpayers.

It is nothing new that a portion of taxes found will be unrecoverable. Why would that not be taken into account?

[Martin Dompierre]

Mr. Chair, basically when the agency calculates its additional revenue, it does not take into account the written-off activities of the agency. In other words, with regard to tax that will never be collected, when they do the calculation, they're not subtracting that amount from what they report to Parliament.

Basically that's what we observed, Mr. Chair.

[Pat Kelly]

Was there any reason given?

[Martin Dompierre]

Basically, Mr. Chair, they don't have the information of the written-off dollars or amount coming out of these compliance activities. The total amount they have is for the agency as a whole.

[Pat Kelly]

However, all of their projections are based on estimates. Surely there can be an estimate of what is unrecoverable.

[Martin Dompierre]

Mr. Chair, we asked the agency to provide us with that breakdown specifically for compliance activities, and they were not able to provide us with that information.

[Pat Kelly]

Indeed.

I also note, similar to Mr. Arya's comment, the agreement from the agency in its response under paragraph 7.86 in your recommendation that it “should analyze whether there are more accurate measures to track additional revenue generated”. The response was to agree with you.

Then, in the next sentence, they say that “...both the Treasury Board of Canada Secretariat and the Department of Finance Canada are satisfied with the Canada Revenue Agency's current reporting methodology....”

Do you have any comment on their response? They say they're agreeing with you, but then they defend their current methods.

[Martin Dompierre]

Mr. Chair, basically they indicated to us that they had approval from the Treasury Board and the finance department that the methodology they were using was accurate and good.

We felt that using estimates to report back to Parliament would not be sufficient. In other words, they should consider other, more accurate measures to track additional revenues generated from the budgetary funding.

[Pat Kelly]

Okay.

Are we—

[The Chair, Conservative, Kevin Sorenson]

You have a minute and a half.

[Pat Kelly]

With the small amount of time I have left, I'll go to an earlier portion of the report, wherein you noted a discrepancy.

You talked about the different types of taxpayers, breaking them down into those with income and assets over a certain threshold and those who do or do not have offshore transactions. You pointed out that individuals, Canadians without income or assets in excess of $250 million and without offshore transactions, are limited to 90 days when there is a demand for the production of documents, yet other taxpayers—including, as you say right here, those with offshore transactions—are being allowed to have extensions for months or years or, even in the event of failing to produce documents, to merely have files closed without any tax assessed.

Can you let us know what possible justification the department had for that?

[Martin Dompierre]

Basically, as you pointed out, an individual taxpayer who's being challenged by the agency to provide additional information on a receipt is given 90 days to respond. If they don't really respond or provide that information, they're automatically disallowed—the receipt or the deduction—and they're reassessed, whereas when you look specifically at offshore transactions, again, they can make requests for additional time due in some cases to complexity—

[The Chair, Conservative, Kevin Sorenson]

Thank you. We are well over, and I want to give Mr. Chen an opportunity to ask a question quickly.

[Shaun Chen, Liberal, Scarborough North, ON]

Thank you, Mr. Chair.

My question relates to the security deficiencies at Canadian missions abroad, particularly with respect to overall project management. It's my understanding, based on the AG's report, that Global Affairs is responsible for overall project management, but they did not seem to have proper people in place.

Government is extremely big, and there is expertise in many places. I'm wondering if you had a satisfactory answer from the department as to why that knowledge wasn't tapped into, why the people perhaps doing a good job in project management in other departments were not consulted or brought over, and why these positions were not filled with the great expertise we have out there.

[Carol McCalla, Principal, Office of the Auditor General]

Yes, we did indeed ask Global Affairs that question. As we point out in the report, they did have long-standing vacancies in their project management shop for developing and implementing their capital projects, which are necessary to resolve the security deficiencies at missions abroad. They told us that there was a government-wide shortage in this type of expertise.

We noted in our report that Defence Construction Canada does have this expertise. Our office had completed a special exam of this agency. It's an independent agency that does defence construction projects. It's mostly for DND, but it is available to do those for the government with a special agreement in place. We found that their projects had been completed on time, on budget, and in accordance with the requirements. We suggested to Global Affairs that they contact Defence Construction Canada. They were in agreement with that suggestion. Actually, the folks in the shop had worked with them previously and they'd had a favourable experience with them.

[The Chair, Conservative, Kevin Sorenson]

After Mr. Bezan, I have one question left, and then our time is up, I'm afraid.

Go ahead, Mr. Bezan.

[James Bezan]

Thank you, Mr. Chair.

I want to come back to Report 3 and compare that with the Auditor General's 2012 spring report on the fighter jet replacement program at that time. You looked at everything at that point in time through the office—sole-sourcing, life-cycle costs, the policy itself, as well as the joint strike fighter memorandum of understanding.

Then in this report we are talking about a sole source of “used” fighter jets, with no comment. We're looking at a plane that is used and needs to be upgraded, yet we don't talk about life-cycle costs.

I'm wondering why there's a double standard.

[Casey Thomas]

At the time of the audit, there had been no decision to buy the Australian jets. We focused on the areas that we thought were going to be most helpful to Parliament and to National Defence in looking at the risks facing the current fleet to determine whether or not it was going to be in a position to continue with the current CF-18 fleet until a replacement fleet came in.

There was no decision to buy Australian jets or other jets at that time, so essentially there was nothing for us to audit.

[James Bezan]

What would be the nexus, then, to require a proper evaluation of the new life extension program as well as the purchase of this Australian scrap metal?

[Casey Thomas]

In terms of our audit process, as I mentioned earlier, we look at the different risks. We look—