Thank you, Mr. Christopherson.
Evidence of meeting #134 for Public Accounts in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cmhc.
A video is available from Parliament.
Evidence of meeting #134 for Public Accounts in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cmhc.
A video is available from Parliament.
9:50 a.m.
NDP
David Christopherson NDP Hamilton Centre, ON
I'm glad I got here. I was trapped in the traffic. I guess one of the bridges is shut down. I really wanted to be here for this one. I was very enthused to dig into this one and to get to this public meeting. The main reason is that this is a darn good report. There are some issues, and I think my two colleagues, Tom and Randeep, have done an excellent job of wading into the minutia of that, but I love it when the big problems are buried in the details of what we're working on.
In the main, your biggest problem and your biggest deficiency wasn't even your fault. It has to do with the appointments process. The auditors, in the language they use, were practically swearing when they said things like “serious weaknesses”. However, it's not your fault.
I think I got something from your opening remarks, but is that now resolved? Are you up to speed now on the board appointments?
9:50 a.m.
Chairman of the Board, Canada Mortgage and Housing Corporation
Yes, we are up to speed on all the appointments. We have a full complement of directors. We have bridged all the gaps or deficiencies in capabilities and capacities on the board. I think, in total, we have a rich combination of experience that covers a broad spectrum. In the context of the board composition, we're certainly bridged, and we have strengthened the internal and oversight processes, in relation to the remarks made by the Auditor General.
On both counts, both in terms of structurally adjusting some of our committees and adjusting the processes internal to the board and the board membership, I think we have addressed all those issues.
9:50 a.m.
NDP
David Christopherson NDP Hamilton Centre, ON
That's good to hear.
I have to tell you, this is not anything new. We've had it with previous governments. The appointments process is always a problem. There always tend to be bottlenecks, and you know—full confession—I can go back to when I was in provincial government and we had the same problem. We always seemed to be behind, and it always has such a major impact. At the centre, where these decisions are made, it ranks very low in terms of crisis problems, but in terms of the problems it manifests, it's huge. I don't know what the answer is, other than to keep underscoring it through reports like this, and politically underscoring it and holding the government to account in question period as to why these things aren't happening.
When I first opened this, I thought, oh, it's CMHC—this is going to be going down the rabbit hole. This is going to get ugly, because there are so many moving parts and each piece needs to be analyzed so carefully. If there are problems anywhere, my experience is that a lot of it is due to lack of planning, lack of analysis and lack of risk assessment, which are all the areas you've done a pretty darn good job on.
My opening—and I don't say this lightly, as people know—is that, in the main, given the responsibilities, the number of moving parts that you have to be responsible for and the in-depth thinking that needs to happen, I was fairly impressed with how well the operation has run. I really appreciate the questions of my colleagues, who have a much deeper background in these things. That's why it's good to have a good mix on the public accounts committee, so that we can all bring different perspectives.
I'm curious. I noted with interest what it said on page 8 in paragraph 23 on board appointments. It struck me. It said:
Further, anyone appointed as a director or president is required to divest themselves of any shares of lending institutions within three months of their appointment. These restrictions constrain appointments to the Board by limiting the pool of eligible candidates.
That's pretty big. Senators don't even have to do that, but we won't go there, will we?
How much does a board member make?
9:50 a.m.
Chairman of the Board, Canada Mortgage and Housing Corporation
I should be able to just roll this one off the top of my head, but—
9:50 a.m.
Chairman of the Board, Canada Mortgage and Housing Corporation
—they're paid on a per diem basis. My recollection is that it's $400-ish a meeting. There would likely be eight meetings a year for board members, plus a couple of others that may come up as conference calls, for which a lesser fee is paid.
9:50 a.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
You look like you're leaning in.
9:50 a.m.
Assistant Auditor General, Office of the Auditor General
They're pointing to me. I don't know the answer in terms of the whole scale and what numbers apply to the scale. I will simply say that the chairman's assessment of the likely per diem is accurate, from my knowledge of Crowns, generally.
9:55 a.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
I'd like to say two things. Managers need oversight. It makes us stronger. You need the sounding board. An effective board of directors is crucial to an institution as significant as ours. I would say that some past liberal practices would probably have been curtailed—in the ancien regime—with more informed oversight.
Having this board of directors in place is crucial and the restriction you mentioned in our legislation is quite prohibitive.
9:55 a.m.
President and Chief Executive Officer, Canada Mortgage and Housing Corporation
It extends to the fact that if I, as CEO, own shares in a mutual fund that happens to own shares in a lender, I can't be CEO.
9:55 a.m.
NDP
David Christopherson NDP Hamilton Centre, ON
I get it. I understand why. It's great public policy, but from a practical level I'm wondering.... Either there should be a little less restriction or a little more money, but that's an awful lot. I mean, if you're retired and you're now sort of dabbling and recontributing based on your experience, I can see that, but somebody who's active in the middle of their career, the kind of sharp people that we're looking for.... Not that retirees aren't sharp, are they, Chair? No, they are very sharp.
Nonetheless, you do want people who have various experiences in life.
I see one of the assistant auditors general kind of nodding her head. Do you have any thoughts on this? Maybe you've had some chats.
I don't know. It just seemed to me to be an awful lot to ask. It should be asked. It's good public policy, but boy, that's not much remuneration for giving up your whole investment package, which may be leading to your retirement.
Can I hear further thoughts from the Auditor General side, please?
9:55 a.m.
Chairman of the Board, Canada Mortgage and Housing Corporation
I won't comment on the wisdom—
9:55 a.m.
Assistant Auditor General, Office of the Auditor General
We have not audited compensation arrangements for boards of directors. While it is a very important conversation you're having as members, I must say our office has not done any sufficient audit work to have any real comments in that area.
9:55 a.m.
Conservative
9:55 a.m.
Chairman of the Board, Canada Mortgage and Housing Corporation
I won't comment on whether or not it's a restriction that has impact, but I just wanted to point out that there is an option to place one's investments in a blind trust, so that if one holds those particular shares they can be placed at a distance from the individuals.
9:55 a.m.
NDP
David Christopherson NDP Hamilton Centre, ON
I don't mean this to be my attack day on the Senate, but you'd think that people at the level of the Senate would be expected to do the same thing and they don't. In fact, they can sit on boards, but again, we won't go there.
9:55 a.m.
Conservative
The Chair Conservative Kevin Sorenson
Maybe I'll jump in right there, Mr. Christopherson.
One should not give up in your retirement, Mr. Christopherson, and downgrade the Senate. There may be a place for you.
9:55 a.m.
NDP
David Christopherson NDP Hamilton Centre, ON
Death, taxes and me in the Senate are three things you can guarantee.
9:55 a.m.
Liberal
Chandra Arya Liberal Nepean, ON
Thank you, Mr. Chair.
Actually, I tend to agree with my colleague, Mr. Christopherson, but here I have to disagree. I am really concerned with this Auditor General's report. Some of the points that were raised by Mr. Kmiec are quite valid.
Way back in 2016, in the annual reports that we get from public accounts—in those two huge volumes—we get a few lines on the contingent liability. The contingent liability from CMHC has been to the tune of about $450 billion. When I expressed my concern I was assured then by the assistant deputy minister from the Ministry of Finance that the stress test is all done and everything is very good, but the Auditor General has not given you a clean check on that very critical component for CMHC.
You are doing a great job on other things, but when it comes to contingent liabilities all I have to look at is what happened about 10 or 12 years back in the U.S., when Freddie Mac and Fannie Mae collapsed and led to all the financial crisis.
I'll quote the Auditor General's remarks, that the need “to address all significant risks helps mitigate financial risks to the Government of Canada and to the Canadian taxpayer.”
I saw that in your prepared remarks—and I was surprised—you did not emphasize the stress test, but in your verbal remarks you changed some of the things, which was quite interesting and quite welcome, too.
Going back to this contingent liability and the stress test, I'll ask this to the Auditor General's office. Do you have expertise in evaluating the methodology used by CMHC to do the stress test?