Public Accounts Committee on Nov. 18th, 2022

[The Chair, Conservative, John Williamson]

Thank you.

Ms. Sinclair-Desgagné, you have the floor for six minutes and 30 seconds.

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

Thank you, Mr. Chair.

Good afternoon, everyone. I'm happy to see you all here.

Let's put some context into the good volumes we have here.

We can all agree that the Public Accounts of Canada 2022 are not necessarily representative of a normal year, as it was a pandemic year that brought extraordinary expenditures and revenues.

During the pandemic, the Department of Finance took some leadership, particularly with respect to pandemic-related assistance programs, whether for businesses or individuals. However, I'd like us to take a closer look at the investments related to some Crown corporations. By the way, there is a slight translation error: “investissements” is translated as “participations”, which is not really accurate in accounting terms.

In Volume I of the Public Accounts of Canada 2022, it becomes clear fairly quickly that Crown corporation spending exploded during the pandemic. In particular, the investments of Export Development Canada (EDC) increased by 17%, from $12 billion to almost $15 billion in a single year. A similar observation can be made for the Business Development Bank of Canada, where spending grew from $18 billion to $20 billion from 2021 to 2022.

I have a first question for Department of Finance officials.

Who decided that Crown corporations would administer pandemic-related assistance programs?

[Nicholas Leswick, Associate Deputy Minister, Department of Finance]

To be honest, as we were generating programs—and, as you know, many of these programs were sector specific and regionally specific—often we engaged bilaterally with the five financial Crown corporation community—so BDC, EDC and to some extent CMHC as well—to ensure that the programs we were standing up were within the wheelhouse of their mandates, and that we could leverage the financial authorities they had to deploy the programs or supplement those authorities with new legislation and new authorities in order to deploy the programs.

For EDC in particular, the Canada emergency business account was something that we leaned on them to work directly on, to play that interlocutor function with financial institutions in order to leverage their expertise within the financing and credit community to deploy that program.

For BDC—

I'm sorry. I can stop there.

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

I'm actually going to ask a follow‑up question about that.

Coming back to the public accounts, after the pandemic when the balance sheet is being drawn up, it's impossible for the average person to know exactly how much money is being spent, how many corporations are spending, what those corporations are called and where they are located, because Crown corporations don't have the same accounting standards as government departments.

My next question is for the Auditor General.

We understand that your mandate primarily empowers you to look at programs overseen by multiple departments. In the case of pandemic-related assistance programs, in your opinion, would it not be relevant to go and look at how the Crown corporations managed some of them, especially since the average Canadian can't do so should they be very interested in these kinds of numbers?

[Karen Hogan]

As you know, we audit several Crown corporations. During our annual financial audits, we look at the expenditures Crown corporations have made during the year. If it's a program, we audit those expenditures.

If you think of a management audit, where we're going to look at whether a program has been managed effectively and efficiently, we don't do that in a financial audit. However, we might include a Crown corporation in a management audit, as we just did for the chronic homelessness matter—

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

It was actually included.

In this case, it might be relevant to have information about a Crown corporation. That would be possible if a performance audit were conducted, but also simply if more information were obtained on the provincial distribution, including which companies were given access to certain programs. It would require more indicators, such as company size and the sectors involved. The goal would be to have more information so that we can better manage a future pandemic, which is something we don't want.

How much time do I have left, Mr. Chair?

[The Chair, Conservative, John Williamson]

You have one minute left.

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

Very good.

Let's talk specifically about the CEBA, or the Canada emergency business account. For those watching me or hearing the excellent interpretation provided to us, this program provided interest-free loans of $40,000 to $60,000 to over 900,000 small and medium-sized businesses and non-profit organizations. The government has lent more than $49 billion through this program.

In recent weeks, thousands of businesses have been asked to pay back the full amount, including a grant they are expecting to receive by December 31, 2023. Because the EDC is not intended to interact with the public, these businesses are unable to get answers about the rejections, submit another document, or simply talk to someone. That's because the EDC doesn't have a customer service department or a department tasked with providing that type of service.

Why was the EDC entrusted with this program?

[The Chair, Conservative, John Williamson]

I'm sorry, but your time is up. You'll have to wait until the next round to get a response.

Moving on to Mr. Desjarlais, you have the floor for six minutes and 30 seconds.

If you are wondering why I've added 30 seconds, it's that I fell into Mr. McCauley's trance when he was talking and I let the clock slip. To level the playing field, I'm adding 30 seconds for everyone.

Mr. Desjarlais, you have the floor.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to thank all the witnesses for being present. I'm sorry I'm not there with you, and I hope our conversation today is not diminished by that.

I want to begin by talking about something that perhaps the Auditor General and others could have guessed I was going to bring up. It's something that's been a recurring theme in many audits, in particular related to questions I've posed to Treasury Board in the past on the Phoenix pay system. There is no question that disaster is affecting regular folks. It's affecting people in my community. It's affecting people right across the country.

I want to share with my fellow committee members and with the witnesses here a story of someone named Tristan, a gentleman who works here in Edmonton for Parks Canada. He began working for Parks Canada in 2015. During that experience, in 2016 and 2018, he found that he was underpaid by $7 per hour. That's a massive amount of money to go without, particularly with the cost of living crisis we're having now.

He thought it might have been fixed when he received a $3,000 payment one month. He thought he was being compensated for what had been a really terrible underfunding of his paycheque. What he received next, however, was a bill to reclaim that money. He had thought for a while that the system had fixed itself, but he found quickly that it wasn't the case, and he was being asked to pay money back while also being underpaid by $7 an hour.

This has real-life consequences. This person, Tristan, is a real person, a member of PSAC who has advocated within his rights as a worker to try to resolve this system on behalf of so many workers.

This is a real issue affecting Canadians, and it affects them on regular decisions like whether or not they're going to buy a house. Can I afford to buy a house? Can I have children? Can I get married? These are the questions Tristan is asking himself and his family members. It breaks my heart to know this is the case, not just for Tristan but thousands of people across the country.

I looked at the Auditor General's report, and I want to thank the Auditor General for her commentary, which is a supplement to the audited statements in relation to her comments on the Phoenix pay system. It's true that the percentage of errors is concerning to the Auditor General and to me, and I believe there is a significant issue. I point to evidence suggesting that the supplement on point 35 and point 36 demonstrates that there is a total increase in the number of pay requests needing to be resolved.

I'd like to begin by asking representatives of the Treasury Board Secretariat some very important questions, and I hope to get some good answers.

Is it acceptable that the level of outstanding pay requests is still continuing to rise, six years after this Phoenix catastrophe began?

[Roch Huppé]

I'd like to start by saying I have extreme empathy for people who have to deal with pay issues, to be honest with you. Again, not having the right pay is something major, and obviously we need to take the necessary steps to deal with it.

Obviously, the Auditor General noted there were some improvements seen in a number of cases, and stuff like that. That said, there is still so much work that needs to be done. So much work has already been done. It is a definite priority of the government to continue to improve and make changes, and I get—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Mr. Huppé, what are some of those actions? Can you describe to me, in concrete terms, what some of those actions are?

[Roch Huppé]

Absolutely.

Over the last few years, there have obviously been system modifications and adjustments to deal with the types of issues that were coming up. There has been analysis done on how to use our resources. There has been an increase in resources. As an example, many of those pay advisers are now in a situation where they have gathered a lot of experience. The more experienced are now being put towards the more complex cases. The ones who have a bit less experience—who are new in the job—are being put towards the less complex cases. What we're trying to do is increase the efficiency of dealing with these cases.

Like I said—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

How much longer do you think the workers will have to wait?

[Roch Huppé]

Sadly, I don't have information for you on how much longer.

What I can tell you is that PSPC, which is the department responsible for dealing with the cases, is trying to improve the time frames. They obviously have timelines by which they try to resolve a case when someone declares a pay issue. We're meeting more and more of those timelines, but we're not there yet. The aim is to have 95% of cases dealt with in the established time frames.

Again, like I said, although we've seen some improvement, there is definitely still a way to go.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

I see.

Perhaps we can quickly get a response from the Auditor General.

[Inaudible—Editor] mentioned, in the note, that “more efforts are needed, particularly to process requests that have remained outstanding for several years.”

Ms. Hogan, how confident are you that this problem will be addressed, given the fact that we're still dealing with this years later? How do we build confidence for our public servants?

[Karen Hogan]

I'm very confident, since 2016, that Public Services and Procurement Canada is doing a lot to try to improve the situation, but there is a complex web of rules.

I would like to highlight one thing: There will always be pay action requests. I don't think anyone should expect that it will come down to zero, because some of those pay action requests are about changing a bank account or moving to a new address. However, those that address an individual being over- or underpaid should be collected.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

These are two different things, though, with all due respect. Phoenix is different.

[Karen Hogan]

Yes.

[The Chair, Conservative, John Williamson]

I'm afraid that's the time.

We are going to our second round now.

Mr. Kram, you have the floor for five minutes. It's over to you, sir.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much, Mr. Chair, and thank you to all the witnesses for being here today. I would like to start by thanking you for all the work you do on the Public Accounts of Canada. I'm sure it's not a trivial effort, as we can all see.

Ms. Hogan, I would particularly like to thank you for the opinions you offered on pages 54 to 56 of the report. On page 54, you focused quite a bit on deficits and COVID-19 expenses. Could you elaborate on why that was the focus of your opinions on page 54?

[Karen Hogan]

The part of our independent auditor report that you're referring to is called an “emphasis of matter” paragraph. It is at the discretion of an auditor to highlight elements they believe the readers of the financial statements should be aware of. It is saying the amounts are properly disclosed and properly accounted for, but they're of such significance to the financial statements that we draw readers' attention to them.

We used that emphasis of matter paragraph for the first time last year, and we felt it was still warranted this year, given that expenditures related to COVID payments were around $76 million.

[Michael Kram, Conservative, Regina—Wascana, SK]

Are you expecting these COVID programs to be highlighted in next year's report, or have the pandemic programs been wound down enough and early enough in the fiscal year that they won't be a major factor in next year's budget?

[Karen Hogan]

Most people know that most of the support relief programs related to individuals have come to an end, so I expect that the expenditure side will likely go down. However, the level of effort for us to audit the government's post-payment work and its assessment of what's receivable—its collections—will likely still be considerable. Whether or not it impacts our audit opinion will depend on when we're doing the audit next year. We make that judgment call during and at the end of every audit.

[Michael Kram, Conservative, Regina—Wascana, SK]

In your opinion, is the deficit cyclical due to the COVID-19 expenditures, or are we in a situation now in which we're facing a structural deficit for the Government of Canada?