Public Accounts Committee on Nov. 18th, 2022

[Karen Hogan]

Mr. Chair, as the member pointed out, that area is unaudited, so I think the question is best asked of the comptroller general's office.

[Roch Huppé]

I have to admit that I will have to take that question back and give an answer around the variance analysis for that one. That's my team. I don't have that offhand.

[The Chair, Conservative, John Williamson]

You might get that question again on Tuesday, so you can do a little homework.

[Roch Huppé]

I figured that.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Okay, you don't have an answer. Could we get an answer in writing ahead of Tuesday, though? I'd like to get an initial sense of what went wrong, and then I can follow up.

Again, I'm expecting that we'll see audited information, especially in an area that's been so sensitive and such an issue of concern for Canadians.

I also just noted, in terms of the expenses of the Passport Canada revolving fund, that there was actually a decrease from 2021 to 2022 in the amount we're spending on salaries and employee benefits. I would have assumed that there would have been a significant increase in demand for services.

Are we cutting back the number of people working for Passport Canada? Is that part of the explanation behind the service problems?

It was $101 million in 2021 and $94.5 million in 2022. Again, why are we spending less on salaries and employees at Passport Canada between these two years?

[Roch Huppé]

Again, if you'll allow me, I'll take that back and have the details around why there's a decrease.

[Nicholas Leswick]

I think if we put ourselves in the context of the 2022 year.... These are the 2021-22 public accounts. Over the course of 2021, nobody was really travelling a whole lot. Then there was the whole omicron episode at the very front edge of 2022. I assume there wasn't a whole lot of business going on in the Passport Canada office.

Then omicron passed and the whole world reopened. That flipped the switch. I think that's when the chaos started.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I'm comparing the 2020-21 numbers to the 2021-22 numbers, though. From 2020 to 2021, of course that's well into the pandemic in terms of the fiscal year. Then we have, I would assume, more people making passport applications in 2022—that's certainly the sense we got in our constituency office—yet we're spending less.

I don't know if you have an answer for that or just speculation, but the speculation doesn't seem to line up with what was happening.

[Nicholas Leswick]

This cut off on March 31, 2022, though, so you kind of were—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Right, but I think there was still more travelling going on, on balance, in that period than there was in the previous period. I'm comparing it with the fiscal year that ended in 2021, which would have taken us from essentially the beginning of the pandemic, when everybody stopped travelling and nobody had any idea what was going on, to the year after that.

I also want to mention, before my time runs out, that there was a big increase in professional and special services. There was a substantial increase in overall spending but less spent on employees and more spent on professional and special services. Again, the result of that seems to have been, especially as we've seen coming into this fiscal year, poorer outcomes.

Do you have any explanation as to the big hike in professional and special services alongside the cut in spending on regular employees?

[The Chair, Conservative, John Williamson]

Mr. Genuis, we're going to have leave that hanging for now. You can come back to it—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I look forward to an answer in writing as soon as possible.

Thank you.

[The Chair, Conservative, John Williamson]

—or I suspect that the comptroller will have some answers for us pretty soon. I appreciate the questions.

We turn now to Mr. Fragiskatos.

You have the floor for five minutes, please.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair, and thank you to our witnesses.

My questions will go to Finance. I'm looking at page 41 of volume 1, table 1.1, under line item “employment insurance premiums”. The amount for 2022 appears to me to be quite healthy.

Based on everything the IMF has said about a potential slowdown in the global economy, and based also on what the World Bank has said on that same issue, I'd like Finance's view on where we are in terms of the amount for EI and whether or not we are well positioned to weather a recession storm, potentially, if that comes.

[Nicholas Leswick]

I'm sorry, Mr. Chair. I don't know if I totally understand the question. Is it whether the EI program is fit for purpose for the next recession?

[Peter Fragiskatos, Liberal, London North Centre, ON]

No. It's our EI premiums under “revenues”.

[Nicholas Leswick]

Yes, I see that.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Is that a strong number, based on what the IMF has said in particular about a potential slowdown in the global economy? If we have Canadian workers who are let go, are we well positioned as a country to respond to their needs?

[Nicholas Leswick]

The EI insurance premium line reflects premiums paid by employers and employees on payroll deductions. The approximately $24 billion just reflects that income drawn into the EI account, which is consolidated with larger consolidated revenues.

Is the EI account well positioned? I mean, the EI account is in deficit right now, so in that context, I would potentially question whether it's well positioned. On the other hand, the employment insurance program itself, I think we've shown, has shown some resilience and has been fit for purpose over the course of the last number of recessions. It seems to be very adaptable and flexible to economic conditions. It's dynamic to different parts of the country, and it provides an appropriate replacement rate for workers who have temporary layoffs.

I'm confident in that, but in terms of the financing of the account, I mean, it's been a rough road over the last two years, quite frankly. We need to rebase in our position in the account.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Okay.

Mr. Dong already brought up the debt-to-GDP ratio. There wasn't enough time, obviously, to get into more. I would like more information on how Canada compares with like countries, for example, the G7 partners that we have. Where are we in terms of our debt-to-GDP ratio compared with those members?

[Nicholas Leswick]

We have a chart on that. We do very well. We're a G7 leader in terms of our debt in relation to the overall size of our economy. You can see an illustration of that in the chart on page 35.

[Peter Fragiskatos, Liberal, London North Centre, ON]

On the debt-to-GDP ratio as a measure, obviously there are many ways to tabulate a country's debt. We often hear the government making reference to the debt-to-GDP ratio. I think there's very good reason for that, but it's important to put on the record why debt-to-GDP ratio is the go-to, so to speak, for the Government of Canada. Maybe you can add something about the IMF in terms of your interactions with the organization. They seem to take it very seriously as well.

Why is it that particular measure as opposed to others? What does it add that others don't?

[Nicholas Leswick]

It is a good reflection of a country's ability to repay its debt, to service its debt in relation to the size of its economy, so full stop on that. I think there is consensus that it's a good metric in terms of overall debt sustainability over the near term, and over the longer term from a fiscal sustainability perspective.

I acknowledge that there are some pitfalls and caveats when you start comparing between countries—I think we've touched on that at this committee before—because every country is different. You have the highest sovereign level of governments and you have provinces at sub-sovereign levels. For the IMF to establish this level of comparability, they have to do a lot of different puts and takes.

We do this reconciliation on page 35 to be very clear and transparent in terms of how we go from a federal debt-to-GDP ratio, which is the kind of target the government talks to in terms of how it wants to achieve a certain target in its budgets or updates, versus Canada's net debt-to-GDP ratio, which is what is compared across countries. That reconciliation is shown on page 36.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I don't think I have much time to get into page 36, but I will if—

[The Chair, Conservative, John Williamson]

We can come back to you, because you are out of time.

It must be a Friday afternoon—I'm slipping on the timer here—but these are good exchanges.

Mr. McCauley, you have the floor again for five minutes. I am going to be alert in watching the clock this time.

You're on mute, sir.