Public Accounts Committee on Nov. 3rd, 2016

[Bill Matthews]

This is a bit odd, but I will mention it to you.

Colombia is one of the best countries in the world at tracking its military assets. We don't often think of South America in terms of best practices in accounting and asset management. I know National Defence has recently been put in touch with its counterparts in Colombia to talk about the systems and the practices it uses. There are ongoing discussions with National Defence. The people there are taking this seriously, but this is a real challenge to do.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Matthews.

We'll now move back to Mr. Harvey.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

I think my questions are going to be for Mr. Matthews, but whoever feels it is appropriate is free to answer.

I'm going to concentrate my questions on the $6.3 billion estimated for remediation of environmental sites. The $6.3 billion is on page 2.44. Is it the same as the 10.4% that's identified on page 1.16 under accounts payable and accrued liabilities?

[Bill Matthews]

I'll start, and then my colleague Diane will probably add something.

On page 1.16, which is the overview, you'll see accounts—

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

It says “environmental liabilities”—

[Bill Matthews]

That would be the same liability, yes.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

So our environmental liabilities as a country represent 10.4% of our total liabilities?

[Bill Matthews]

This is accounts payable and accrued liabilities by category, not of total debt. That's just a subcomponent of total liabilities.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I couldn't find a figure. I can see in the tables, I guess in 5.13, where the environmental liabilities have continually grown over the years, and even from 2015 to 2016 where they've grown. Is there an average rate of environmental indebtedness that we use to make broad-based calculations?

[Bill Matthews]

There's not an average rate. This is a rather sophisticated model, and it's more sophisticated this year compared with previous years because of the improvements we had to make.

We have the sites we know the Government of Canada is responsible for cleaning up. You get to a stage where you can make an estimate on those because you investigated, and then you start remediating. At the same time that you're remediating those sites, you're assessing other sites that have yet to be assessed. Sometimes the sites you're working on turn out to be more expensive or less expensive, so there are adjustments there, but we're always adding new sites.

The improvement made this year in response to the observation of the Auditor General was that we had some sites that we had yet to assess, and they had zero liability attached to them. The Auditor General was basically pointing out that we probably have enough experience with similar sites to make an estimate of these things, so where there were similar sites, we used a model from Golder to make an estimate of those sites we had yet to assess. When we get in there, we may find out that the real assessment is different from what our model generated, and we'll be updating those liabilities. There are no real trends we can point to here.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I see that we retired roughly 1,000 sites from 2015 to 2016.

[Bill Matthews]

Correct.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

How does the rate of newly identified sites compare with the rate that we're retiring sites?

[Bill Matthews]

My recollection is that the rate of newly identified sites has dropped off, but we're still assessing those sites. There's a choice to be made each year with the dollars. Do you invest them in remediation of existing sites, or do you invest them in assessing sites that you know you're responsible for but for which you've yet to get the details? There was a push to get some cleanup done on the remediation front, but that balance changes every year.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Compared with other countries in the G7 or other countries in general, is there a calculation made to compare what Canada has identified as environmental debt with what similar countries have?

[Bill Matthews]

I'm not aware of any comparisons we make in environmental liabilities. A lot of the liabilities are driven by things the government was not necessarily responsible for at the time but became responsible for later. I'm not sure about other countries' experiences in taking ownership of issues they may not have caused. The two mines would be the big example there.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Right. I forget right now, but looking back on the last time we entertained this last year, I think it was the majority of that debt, right?

[Bill Matthews]

There are about five or six sites that represent a big component, and we can come back to that if you like.

[Diane Peressini, Executive Director, Government Accounting Policy and Reporting, Treasury Board Secretariat]

I have the numbers here.

The two big mines are about $2.3 billion of the debt. The top five account for $3.6 billion of the $6.7 billion liability for the remediation of environmental sites.

[Bill Matthews]

For new members, Mr. Chair, the two big mines are Faro Mine and Giant Mine.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Is there an increased awareness of those particular sites, of trying to work to remediate those two specific sites over the larger number of small contamination sites, or how has that been evaluated?

[Bill Matthews]

They're certainly active projects.

One of the challenges around Giant Mine is how to remediate it. It's a technological challenge. It's not just a matter of getting some heavy equipment out there and tackling it. There has been a lot of work done on the actual approach to remediation.

That's the challenge with environmental liabilities or contaminated sites. They are unique. Some of them can be done very easily. For some, you can just put a fence around and say “keep out”. Others, like Giant Mine, are a real challenge for the industry to figure out how best to remediate.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Did you have another quick one?

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

There is one other little thing. I noticed that the environmental liabilities table 5.7 identified Indian Affairs and Northern Development's total liability at roughly $3.8 billion.

I was just wondering what makes it such a giant number, compared to the rest of the liabilities within that table.

[Diane Peressini]

The two mines are there.