Public Accounts Committee on Jan. 26th, 2021

[Len Webber, Conservative, Calgary Confederation, AB]

Great.

You indicated that you issued a “clean opinion” this year, meaning exactly what, Ms. Hogan?

[Karen Hogan]

We audit the government's financial statements and compare them to generally accepted accounting principles that are applied to the public sector. We look to ensure that they are fairly stated and that they are free of errors that would impact the user's decision. A clean opinion basically means that you can rely on the information in the financial statements.

It is something that very few countries can say they receive, so Canada and all of the departments and agencies and Crowns that are involved in the development of these statements should be proud of that.

[Len Webber, Conservative, Calgary Confederation, AB]

Excellent.

Madam Chair, do I have some more time left over there?

[The Chair, Conservative, Kelly Block]

I believe you have about 20 seconds.

[Len Webber, Conservative, Calgary Confederation, AB]

Okay, I'm just going to leave that 20 seconds for my colleague, Mr. Lawrence, who kindly gave me the first round.

Thanks, Madam Chair.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Webber.

We will now turn to Mr. Longfield, for six minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Madam Chair.

It's great to see all our colleagues around the table, especially the people who have prepared the work for us. Ms. Hogan and Mr. Huppé, thank you for your work.

I'll give a special welcome as well to Mr. Sabia in his new position. Congratulations on your appointment. It's great to see you here this morning, as well.

There was lots of reading over the holidays and lots of stickies are now on the books. I wanted to draw attention to volume III, section 2, under “Supplementary information required by the Financial Administration Act”. Mr. Huppé, to pick up on the last comment in your opening remarks around losses of public property, on pages 147 to 163, it's showing 14,951 cases of loss of public property due to accidental loss, damage or destruction, with a total of $21,372,105 that aren't expected to be recovered. There were 3,616 cases of loss of public property as a result of offence or other illegal acts, resulting in losses of $1,127,128 that aren't expected to be recovered. Finally, there are 104,399 cases of loss of public money due to an offence, an illegal act or accident, resulting in an estimated $4,699,469 that, again, is not expected to be recovered.

That's a lot of taxpayer dollars that we are now not going to be able to recover. How does this compare to previous years?

This is for Mr. Huppé or any official.

[Roch Huppé]

Thank you for the question, Madam Chair.

I don't have the exact numbers for previous years. I would tell you that based on my experience, it does vary from year to year. That said, I would say that, overall, there are some big ticket items. They are basically.... Certain misrepresentations are done through our tax systems by some individuals, sadly. There is some misrepresentation on the employment insurance program also.

Over the years, I think there are some cases where it's a recurring theme. That log of the damage of property, for example, went down drastically compared to last year. That's because we had some vandalism on one of our ships. That was reported last year. The drop in that one is close to $11 million and it was due to that.

There isn't a very accurate trend in these things. For different reasons, it will vary from year to year. Sadly, there are always cases of lost property. We talk about a major one being on the national defence side. They have a lot of inventory, so there are cases that are recurring in nature.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

We did hear from Defence earlier on a follow-up to the previous audits. Maybe that's something.... It wasn't in the management notes, but it looked like some big numbers there. Thank you for your clarity.

Mr. Sabia, one that I looked for first off was the incoming revenue for climate change—the price on pollution—and then the outgoing revenue back to provinces and territories, to see whether we were balancing.

Under section 2 of volume I, “Notes to the consolidated financial statements of the Government of Canada“, part 4(a), “Fuel charge proceeds”, on page 63, states that the revenues earned from pollution pricing amount to $2.65 billion, which is another big number. Then in part 5(c), under expenses, it says that fuel charge proceeds were returned, totalling $2.63 billion.

Almost all proceeds were returned, but given that this program was designed to have all proceeds returned back, could you maybe explain the discrepancy—as a result of taxes not being reassessed or assessed or whether it was a timing issue—to see that money being collected by the government isn't being held by the government and that it's actually being returned, the way the policy was intended?

[Michael Sabia, Deputy Minister, Department of Finance]

First, Madam Chair, let me thank Mr. Longfield for his welcome, which is much appreciated on my part.

I would also say that welcome is appropriate because I've only been here for about four weeks or so. If you don't mind, I'll ask my colleague, Nick Leswick, to take on that question.

[Lloyd Longfield, Liberal, Guelph, ON]

Great, thanks.

[Nicholas Leswick, Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance]

Thank you for the question. You're right; there is a slight discrepancy. It's under $20 million on a $2.6-billion program. It's just a matter of revenue and expense recognition over the accounting period. Rest assured that every dollar that is collected through the fuel charge will be returned to the payers in the jurisdiction in which it was paid. Those will match entirely over time.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

I have only 20 seconds, so again, thank you for all these notes. I wish we had more time, but I will turn it back over to the chair.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Longfield.

Perhaps I can take your 20 seconds and join you in welcoming Mr. Sabia to committee and congratulating him on his appointment. We look forward to working with him in the future as well.

I will now turn to Mr. Blanchette-Joncas for six minutes.

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

Good morning, Madam Chair.

I join you in congratulating Mr. Sabia. He played a very important role in a Quebec jewel, the Caisse de dépôt et placement du Québec, which is a legacy of Jean Lesage and Jacques Parizeau. He has my full respect and I welcome him.

I'll start with you, Ms. Hogan. Thank you for being with us again. We make it a habit, and it's a renewed pleasure at every opportunity. To paraphrase a very popular Sunday night show on CBC/Radio-Canada, I'd even say you're our fan favourite.

I'm glad to see how much attention you've paid to the gigantic blunder of the Phoenix payroll system. Beyond the administrative aberrations, there have been nightmarish consequences on the payroll of thousands of civil servants. I know that this issue is being resolved, but it raises deep and troubling questions about the management of a payroll system by a G7 country. I wouldn't be surprised if this were the case in a banana republic, but it's quite surprising in Canada.

In the last four years, Canada has had the worst results for employee payroll errors. The percentage of employees affected has increased from 46% to 51%. In other words, one out of every two paycheques now has errors. I should point out that your sample included only acting pay and basic pay of employees. These are the only salaries you examined. These payrolls represent 92% of the $26 billion managed by the Phoenix payroll system. You'll understand that this does not inspire me, nor does it make the public feel confident.

On a scale of 1 to 10, what is your expectation of the degree of satisfaction of the people involved, once this terrible saga has been finally and completely settled?

[Karen Hogan]

I'd like to begin by thanking you for your welcome comments. I love appearing before the committee and I am very grateful for your support in all of our work.

You talked about errors in payroll. I like numbers, but I don't know if I could give you a number on a satisfaction scale. I'm looking ahead and seeing how the government is correcting the situation and adjusting the pay of the employees in question. Indeed, 51% of the employees in our sample had witnessed errors in their pay this year. However, we are also seeing a decrease in the number of pay adjustment requests. It is important to note that the situation is improving.

Payroll is a shared task. Many people have to ensure that payroll data is not erroneous. By working together, departments will be able to adjust their employees' pay in the future. Before transitioning to a new payroll system, it is important to have the right data.

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

Thank you, Ms. Hogan.

Indeed, it's good to look to the future, but people have died because of the disasters of the Phoenix payroll system.

I know there's a plan of action and we're going to fix it, but according to the numbers I just gave you, one out of every two people still has errors in their pay. I can't imagine that we aren't immediately looking for a quick solution.

I recognize the sensitivity of my question, but do you have the confidence of Parliament? You are acting as a watchdog for taxpayers. Beyond your findings and observations, can you assure the committee that you will follow up on what I believe to be the scandal of our time, just as the sponsorship scandal was in the past decade?

[Karen Hogan]

Since the transition to the Phoenix payroll system and the transformation of payroll management, we've been auditing the steps the government has taken, and I can tell you that we will continue to audit payroll and put pressure on the government. As this is a very significant expense in the financial statements of the Government of Canada, we will still be spending time on it as part of our financial audit.

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

Madam Chair, can you tell me how much time I have left, please?

[The Chair, Conservative, Kelly Block]

Yes. I believe you have one minute left.

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

Thank you very much.

Ms. Hogan, you mentioned the payroll system, of course. I've also seen that there are going to be some problems with the payroll services, so I'd like you to confirm one thing: do you have any additional levers that you need to be able to move more quickly in that regard? According to the report, we will have to wait until 2022 to catch up with all the expected delays.

How can we intervene as quickly as possible?

[Karen Hogan]

This is a question that should be put to the government. We estimate that at the current rate of processing of pending payroll intervention requests, these will not be resolved until 2022.

Obviously, the government deals with new requests for intervention more efficiently, but old requests still need to be processed. It is also important to understand that there will always be requests for payroll intervention in any given period. That said, the government needs to improve its process around the management and sharing of information between departments.

[The Chair, Conservative, Kelly Block]

Thank you.

[Karen Hogan]

With respect to delays in processing requests, you must ask the government how it is going to rectify this.

[The Chair, Conservative, Kelly Block]

Thank you, Ms. Hogan.

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