Public Accounts Committee on Dec. 18th, 2024

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

I understand, Chair, the consideration regarding the late tabling of the documents. I think, fairly, that it would have been good to send us a note on Monday, just so we were kept apprised of it, but I won't dwell on that.

I want to start where Mr. McCauley left off with contingent liabilities so that Canadians have a better understanding of what they actually mean. We're talking about a fairly large number, $76 billion, but this particular document accounts for a new $16.4 billion in contingent liabilities. It says, “As part of advancing its commitment to resolve past injustices by accelerating the resolution of Indigenous claims, the government recorded expenses of $17.8 billion in 2024, of which $16.4 billion is related to contingent liabilities”.

Can you spend a little time articulating more concretely what that means?

[Annie Boudreau]

I will start with the definition of “contingent liabilities”, and after that I will provide some examples.

Contingent liabilities are possible obligations that may result in the future sacrifice of economic benefits arising from existing conditions or situations involving uncertainty. The uncertainty will ultimately be resolved when one or more future events not wholly within the government's control occurs or fails to occur. Contingent liabilities are distant from liabilities in that there is a degree of uncertainty as to whether a present obligation to sacrifice economic benefit exists at the financial statement date of March 31, 2024.

There are two basic characteristics of contingent liabilities. There must be an existing condition or situation, as I was explaining earlier, and there must be an expected future event that will resolve the uncertainty regarding whether a present obligation exists. For a contingent liability to be present, there must be an existing condition or situation, at the financial statement date, that indicates the government may have a liability. The existing condition or situation could be, for example, a legal case—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I don't want to entirely cut you off, but it might be helpful to offer an example that is more accessible than reading some of the definitions you're reading. My constituents are saying, “That's a big number, $16.5 billion of new accounting. What's an example?”

[Annie Boudreau]

To use a court example, if a court case is filed before the end of the fiscal year—before March 31, 2024—there may be a need to record a contingent liability for that court case when a payment is likely. The assessment of likelihood is complex. It may include such items as filing a new claim; certification of a class action claim by the court; the completion of a legal risk assessment by Justice Canada; new information regarding class size or other factors that influence the potential value of a claim; and a decision by the government to enter into negotiations to settle out of court.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

You'll hear Conservatives cast this as us widely missing the mark, suggesting that it's profligate spending, but this is not new program spending. This is accounting for liabilities that pre-existed this government. Is that right?

[Annie Boudreau]

We have three types of contingent indigenous liabilities, and one of them is for specific claims. As you said, specific claims deal with the past grievances of first nations and relate to Canada's obligations under historical treaties.

On March 31, we'll look at the conditions and at whether we're able to assess the likelihood of a payout and the amount that will go with that payout, and we have to make a determination as to whether we need a contingent liability. In some cases, if we're not able to determine an amount, we'll put a note in the financial statements.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I appreciate that.

I want to switch gears a bit, because the other piece—it's a smaller piece—relates to the $1.2-billion writedown of expired COVID treatments and vaccines and another $3.5 billion for loans and receivables related to emergency supports. This has been a politically contentious issue as well, and there have been accusations that the CEBA program was mismanaged. Obviously, the Auditor General has a report on this, and there have been some questions as to the value of the CEBA program and what purpose it served for small businesses.

Mr. Forbes, could you take us back to March 2020 and the dire straits in the ensuing months that small businesses were facing? How necessary was the CEBA program for businesses to survive?

[Chris Forbes]

The CEBA program—and we talked about this last week or the week before—was part of a suite of programs that helped support the Canadian economy through the really difficult parts of the pandemic. The evidence I would look at is some of the results for small businesses—the survival rates and the low bankruptcy and insolvency rates. This was a key measure to support small businesses.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I want to imagine an alternative scenario where a leader who says something like, “I don't believe in big, fat government programs, and I just want to cut taxes and red tape.” How would that have helped small businesses in the course of the pandemic?

[Chris Forbes]

I don't have a counterfactual, but I think absent the CEBA program, we probably would have seen a much higher rate of small business insolvencies and bankruptcies during the pandemic. I think that's a—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Absent CERB, how many people who'd lost their employment would have struggled individually?

[Chris Forbes]

I don't have a number for you, but when we look at the suite of benefits that were provided, our assessment would be that those were necessary to protect Canadians at a time when the economy was largely shut down and when businesses, with the debts they owed, with managing their borrowings and with current activities, were severely impacted, so—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

What if we had just said, “We're just going to cut your taxes”?

[The Chair, Conservative, John Williamson]

I'm afraid that is your time, sir. I gave a little extra because you were in a good exchange. We will come back to that, I hope.

Ms. Sinclair‑Desgagné, you may go ahead. You have six minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

Thank you to the team from the Office of the Auditor General of Canada for being here. We have already wished each other happy holidays, but we will do so again today.

I would also like to thank the representatives of the Department of Finance and the Treasury Board Secretariat for being here.

I'm going to get right into it with a number of questions.

Ms. Boudreau, according to the public accounts, the reason net debt hasn't fluctuated much is that there's a major difference in pension assets. If we look at the numbers more closely, we see that there is a $7‑billion difference between 2023 and 2024.

In one week, I received 30 emails from public servants who live in my riding accusing the government of stealing their pensions. If we dig a little deeper, we can see that the government did indeed dip into the surplus. According to a public service union, the government took far more than it is allowed to take from the public service pension plan.

In addition, you mentioned that this transaction was one of the ones that lag behind the tabling of the Public Accounts of Canada. What seems odd to me is what caused this delay, the fact that the government decided to go after the money contributed by workers, by public servants.

Of the $7 billion, how much, if not the total amount, was taken from the public service pension fund?

[Annie Boudreau]

Thank you for your question.

As for the $1.9 billion or the non-permitted surplus, it has no effect on the consolidated financial statements for the fiscal year ending March 31, 2024.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

How is it, then, that there's a $7‑billion difference on the line for public sector pension assets? Fundamentally, that's where the biggest difference is.

[Annie Boudreau]

I'll have to get back to you with a written answer.

In the meantime, I can tell you that the unauthorized surplus has no effect. There will be none on the pension cheques of people who are retired or who will soon be retired.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

You can't know, Ms. Boudreau, unless you have a crystal ball. We are never immune to disasters. The pension plan could collapse or a disaster could happen in five or ten years; the pension plan may not be as well protected as we think. The government took money directly out of the pockets of public servants, workers, from their salaries. This is money they've earned by working.

Who made the decision to go after $1.9 billion?

[Annie Boudreau]

It's allowed by law. According to the act—

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

I want to know who made that decision.

[Annie Boudreau]

The President of the Treasury Board released her report. According to the actuary's report, which is very clear, you can't have more money in the fund than 125% of its value, so she had an obligation to get that money out, and that's what she did, in accordance with the law.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

That's strange, because the union is saying exactly the opposite: it's questioning the fact that it is legal to get so much money. The union's press release is very clear; it seems to know what it's talking about. Yet it's saying the opposite of what you're saying. According to the union, the amount of $1.9 billion is higher than what should normally be collected by the government.

Are you saying that the union doesn't know what it's talking about?

[Annie Boudreau]

What I'm saying is that it was calculated by the chief actuary. The amount is $1.9 billion, which will be deposited into the consolidated revenue fund.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Okay.

Does this mean that the 30 public servants in my riding whose emails I've received, as well as the hundreds, if not thousands, of public servants, are being told nonsense by their union?