Public Accounts Committee on Jan. 26th, 2021

[Kody Blois, Liberal, Kings—Hants, NS]

If I could, with the 10 seconds that I have.... I didn't have the chance to ask about that, but obviously our interest rates were relatively low in 2020 as proportionate to our revenue.

Can you speak at some point—if someone asks you the question—about how much of that is locked in and how much we might be able to save in terms of interest rates and costs in the days ahead?

[Michael Sabia]

If somebody asks me the question, I'll be happy to answer it.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Blois and Mr. Sabia.

I appreciate that our time is so limited, and it goes by very quickly.

That being said, Mr. Blanchette-Joncas, you have six minutes.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Madam Chair.

I'll come back to Mr. Huppé, since I didn't have time to go any further earlier.

Mr. Huppé, you piqued my curiosity when you mentioned in your opening remarks that it was rare for national governments to be given unqualified audit opinions consecutively.

To your knowledge, among the other G7 countries, have any of them received qualified audit opinions in recent years?

[Roch Huppé]

Thank you for your question.

If I am not mistaken, the United States sometimes receives qualified audit opinions in connection with the audit of its financial statements. I believe this is also the case in some other countries.

What I was mentioning is that the Government of Canada has had an unqualified audit opinion for 22 years. Some jurisdictions can get an unqualified audit opinion one year, but a qualified audit opinion the next year. I believe we are the only G7 country to have had an unqualified audit opinion for 22 consecutive years.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much for these clarifications, Mr. Huppé.

When I was talking about your enthusiasm earlier, I didn't mean to undermine it, on the contrary. Having said that, Canada boasts one of the best public services in the world, yet it can't manage to put in place an adequate payroll system. I think it's disastrous. I can't remain unmoved by the fact that people are losing everything, including their homes and their credit ratings. It has even driven people to suicide.

In 2018, a damning report from the Office of the Auditor General noted slow progress. Initially, the federal government was very slow to respond. Then, a second report on the implementation of measures was long in coming. I would say it's a little too late, because there are people who have suffered from this or are suffering from it now.

Have senior Treasury Board Secretariat officials been sanctioned in this regard? In terms of resolving this issue, incompetence is clearly a factor. There may be people who need to acquire more specific skills, but there is no time to raise their level of competence. Tragedies have happened.

What can you tell us? Were people reassigned or fired to remedy the situation?

[Roch Huppé]

Thank you for your question.

I want to reiterate that my enthusiasm was not intended to minimize this reality, which is really distressing. I agree with you, people have suffered in an extremely concrete way.

I can assure you that people are working very hard to remedy the current situation. For example, we are trying to improve the Phoenix payroll system, and some of the processes put in place have led to improvements. We are also in the process of designing and implementing a new system.

Given the position I hold, I am not looking for sanctions that may have been taken. Furthermore, sanctions and reprimands are confidential information. Therefore, I can't give you any more details at this time.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you for these clarifications, Mr. Huppé.

You will understand that I am conveying the cry for help of many of my fellow citizens who are at the end of their rope. Every day, people come to see me. When there is no accountability, it takes away all credibility from our public authorities. I would be surprised if this current situation, this tragedy, this scandal, were accidental.

My next question is for you, Mr. Sabia.

It's a real pleasure to meet you, even virtually. As I mentioned earlier, your professional background speaks for itself. I can assure my colleagues on the committee that your time at the Caisse de dépôt et placement du Québec was commended by the entire Quebec business community and has been beneficial to Quebeckers' bottom line.

I also commend your commitment to public service. You could have retired comfortably with your family and friends and retained a role as an attentive observer. I sincerely want to emphasize that your renewed commitment honours you, and I thank you for it.

You are now in the position of outsider, if I can use this qualifier in a non-pejorative way. This role in the senior civil service is new for you. You were not a career public servant in Ottawa. With that in mind, I'd like to get your more personal perspective.

You have managed billions of dollars as CEO, both in the private sector, when you were at Bell Canada, and more recently at the Caisse de dépôt et placement du Québec. You therefore have in-depth knowledge of the management of a large organization.

Now you are at the Department of Finance. Do you feel the same freedom of action that you have enjoyed in recent years? Specifically, is your room to manoeuvre reduced by more restrictive government policies?

We know that the coming months will be difficult. In light of the elements raised by the Auditor General and Mr. Huppé regarding the Phoenix payroll system, do you really believe that you, as Canada's top money manager, can prevent another fiasco like the one with the Phoenix payroll system?

[The Chair, Conservative, Kelly Block]

I'm sorry, Mr. Sabia, but we are over six minutes for this member to have posed his question to you. I would remind members that if they want time for someone to answer a question, they need to leave time in their questioning.

I will provide time for Mr. Sabia to give us a short answer to that question.

[Michael Sabia]

Thank you, Madam Chair. It will be quite a challenge to give a short answer to such a question.

Mr. Blanchette-Joncas, thank you very much for your comments. You're very kind.

Concerning the Phoenix issue, honestly, I'm not in a position to answer you, because I'm not at the heart of this matter. I am familiar with this story since it received a lot of media coverage, but I am not currently in a position to give you a direct answer to this question.

However, I feel that the current circumstances and economic conditions in Canada, as well as those around the world, provide an opportunity for the government and the Department of Finance to be creative in finding the solutions that Canada needs to get its economy back on track and increase the level of growth.

So the answer is twofold. Concerning Phoenix, I am not able to answer for the moment. As to whether there will be an opportunity to take advantage of our creativity, my answer is yes. Rahm Emanuel said it well:

“Never waste a good crisis.”

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Sabia.

We will now go to Mr. Green for six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Madam Chair.

I aspire to one day having the kind of glowing recommendations Mr. Sabia received from Mr. Blanchette-Joncas. Maybe at some point in time I'll ask him to write me a reference. It's very nice to see the goodwill in the room this early in the year.

In all seriousness, I have some questions again about volume III, around the total compensation that has been paid out by Crown-Indigenous Relations and Northern Affairs for the victims of day schools, the Sixties Scoop and the breach in legal obligations related to reserve lands, totalling about $3 billion.

I'm not sure, but my first question might go to the Treasury Board. Do you know how this amount compares to previous years?

[Roch Huppé]

Actually, I don't have the exact amount of the settlements from last year, but I would step out on a limb and say that it is increasing, because we came across a few of these settlements in the past year. As you know, as these cases work their way through negotiation and litigation, we reached a point where, in these particular cases, there was a successful settlement, so I would think that it is probably a little bit higher than what we saw last year. We could get back to the committee with the exact numbers, if that's okay, also.

[Matthew Green, NDP, Hamilton Centre, ON]

That's fine.

Can you give us a sense of what is still outstanding?

[Roch Huppé]

Right now, the larger part of our contingent liability has to do with indigenous-type claims around the $25-billion mark. That said, there is also a disclosure note in relation to that. I would tell you that the exposure.... We have more and more of these cases, sadly, that we have to deal with. As we work our way through the process, we reach a point where, in accounting, we have to—

[Matthew Green, NDP, Hamilton Centre, ON]

I'm going to put a direct question to you, sir, and I'm going to ask for a direct response.

[Roch Huppé]

Sure.

[Matthew Green, NDP, Hamilton Centre, ON]

I sense the unease, because I get a sense that the actual liabilities are much more than $25 billion. I am noting here “a breach in legal obligations relating to reserve lands”. What would that actually entail? Would that entail trust funds? Would that entail lease agreements with band council reserves related to liabilities from the Crown to these communities?

[Roch Huppé]

All this package.... These results and land claims, for example, are what we call “specific claims”, as was the case with the residential schools. These cases come in, and obviously.... So I agree.

To respond to your question, the exposure is probably higher than that, but—

[Matthew Green, NDP, Hamilton Centre, ON]

Could I just wager? I'm looking at all outstanding claims in my community. Today we have “1492 Land Back Lane”, McKenzie Meadows, the 1784 Haldimand Tract agreement and six miles on either side of the Grand. We're not even getting into Wet'suwet'en territory and unceded territories, but I will put to you the question: Is it the case that all current claims in court would present as a potential future liability, or have you discounted that in your accounting plan?

[Roch Huppé]

No, exactly. What I was trying to get at is that, in the world of accrual accounting, we officially book in the statements a contingent liability when it reaches certain criteria. If there is a high likelihood, above 70%—and there is usually a legal analysis that's done—that we think we will have to settle or that we will lose, through litigation, and we are able to actually estimate an amount, and it's not frivolous, then we have to start booking that officially in our statements.

That's why I'm saying that the exposure is obviously most likely larger than that, but as these cases work their way through the system, we may reach a point where we need to book some of these other cases also.

[Matthew Green, NDP, Hamilton Centre, ON]

I heard the word “frivolous”. I am wondering, based on the actual contract laws—particularly if there is infrastructure going through a community, if there are moneys that have been put in trust through treaties, which are real, contractual agreements—what would be the order of magnitude of those calculations, even if it's not reflected in your accounting?

[Roch Huppé]

I don't have the.... In a lot of these cases, we're not at the point where we can actually estimate an amount that would be close to reality. Again, as I said, the books are audited, and we have to have justifications in order to assess and estimate an amount, so—

[Matthew Green, NDP, Hamilton Centre, ON]

But if moneys are to be put in trust, then that's real money. That's money that the government has a responsibility for.

[Roch Huppé]

Yes, in cases where we actually have money put aside, where we have an estimate, where we have the knowledge and where we think that we will end up having to pay, these amounts would be reflected in the $25 billion or so that you see there, as I said.