Public Accounts Committee on Nov. 18th, 2022

[Diane Peressini]

I think it's largely because of the changes in interest rates and discount rates, and the actuarial funding evaluation done over time.

[Kelly McCauley, Conservative, Edmonton West, AB]

Would you be able to get back to us? I appreciate that you don't know off the top of your head, but would you be able to get back to us with a more precise answer on that?

[Diane Peressini]

Sure.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks. I'm looking at claims against the government on page 73. There are $4.2 billion in claims, but nothing accrued.

Can I assume these are frivolous claims, or are they claims that have just not matured enough for the government to expect to pay them out, and therefore haven't accrued more losses yet?

[Roch Huppé]

Did you say that's on “contingent liabilities”, on page 73?

[Kelly McCauley, Conservative, Edmonton West, AB]

Yes. This is $4.2 billion not accrued, not specific dollar claims, and the government doesn't have an outcome expected.

[Roch Huppé]

If you say it's in relation to the non-accrued.... For a lot of these claims, there's a legal risk assessment on...taking a provision around contingent liabilities. When we are in the zone.... Say we think that, in a particular case, we are more than 70% likely to have to pay compensation. That's when we start to estimate the amount. That's when we're able to.

The other amount we're disclosing here is an indication of potential additional exposures.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay. Perhaps it has just not matured enough in the investigation or process—

[Roch Huppé]

Exactly.

[Kelly McCauley, Conservative, Edmonton West, AB]

Could some of these just be frivolous ones, where they say, “We're not going to, because they're not going to come to any fruition”?

[Roch Huppé]

I'm sorry. Can you repeat that question?

[Kelly McCauley, Conservative, Edmonton West, AB]

I think I'm out of time. I apologize.

[The Chair, Conservative, John Williamson]

If it's important, he'll come back to it on Tuesday.

We'll now turn to Mrs. Shanahan for our last five-minute round.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you, Mr. Chair.

I think the questions and answers we've been hearing today are testaments to the credibility and transparency of our public accounts process.

I want to go back to Mr. Huppé about this tension between rapidly producing the public accounts and their accuracy, because it's my understanding, from previous testimony, that a certain number of assumptions have to go into building the public accounts. Of course, we want to work with actual numbers as much as possible, but there are a certain number of assumptions.

Can you explain further?

[Roch Huppé]

A great example of that is the revenue amount. Most of the revenues—75% or about that—are in relation to our tax revenues. When you take into account the timeline by which people have to file their taxes, personal taxes are April 30 and business taxes are in June. Because it's such an important amount, we try to rely as much on actual numbers as we can. We let the returns come in at CRA up until around the end of May. Then, with the information we have, we actually estimate the accrual portion of the revenues for that year.

Again, as we indicated, a lot of work goes into these accrual estimates, especially on the revenue side. We have to be mindful. The Auditor General mentioned at the beginning that it was definitely her largest financial audit by far. I would say it was probably the largest in the country by far. Again, the audit work to validate and do checks and balances on what is being reported is quite considerable.

I come back to the fact that we're trying to find ways to become more efficient without losing credibility in the numbers. That tax revenue number is highly key and highly material, so we have to make sure our methodologies to come up with the final revenue number are actually solid, sound, checked and so on.

As I said earlier, we're doing work right now to try to look at the administrative portion of producing the book itself—the e-version of it—to see if we can gain some efficiencies there to allow us to maybe gain a week or two in the process.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

I see.

We've heard comparisons of the timing of the federal public accounts vis-à-vis provincial. I think you mentioned earlier something about federal accounts being 2,500 pages. We all have those three volumes. They make great doorstops, by the way. That is versus a few hundred pages in different provincial public accounts.

What is the difference? Is it just the number of pages or is it the amount of estimation that has to be done?

[Roch Huppé]

Obviously, the number of pages shows you the amount of information that we have to produce and collect. That takes time. Every department does that.

The different jurisdictions also work in different sets of legislative frameworks. For example, in our case, like for some provinces, we need to table these in Parliament. In some other cases, they release the actual public accounts and don't have to formally table them. In a year like last year, had we been in a different legislative framework, we could have released that information, perhaps, before Parliament resumed in November 2021.

There are also other practices where some elect to stagger the tabling. If they have two volumes, they'd table volume one and then volume two later.

Those are all the types of avenues we're trying to look at and what we would need to do to try to advance these tablings.

Again, that level of complexity when I talked about revenues.... In a province, the portion of their tax revenues is probably about 35% on average of their total revenue. Again, the methodologies they use to come up with their accrual number are probably a lot less sophisticated than ours, where it is extremely material and where we want to make sure there's no misstatement in an area like—

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Just on that note, if I may, I would turn to the Auditor General.

[The Chair, Conservative, John Williamson]

I'm afraid that's your time, Mrs. Shanahan.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Chair, you've given a bit of extra time to other people.

I just want to understand from the Auditor General what the consequences would be if statements were ever released and there were inaccuracies in them.

[The Chair, Conservative, John Williamson]

We'll wait, because we will have the same group back on Tuesday. That can be your first question, Ms. Shanahan.

I'm going to get cut off here. The moment the whips agree to give us more time, I will be even more indulgent than I am with members.

Before we sign off, there's an issue that I hope we'll come back to next week. It builds on some comments that Mr. Desjarlais had at the top about the Phoenix pay system. It's not just the pay side that is a challenge for workers—overpayments and underpayments. I understand as well that there is a legal window that's closing for the government to recoup some of those payments. I'm curious to know what the total outstanding overpayment has been to date and the risk to the government going forward. However, we'll save that for Tuesday.

Mr. Leswick, you had a comment about the $45 billion in debt interest charges, which I think you pegged at either 2027 or 2028. If I'm not mistaken, we're going to hit that number next year. I could be wrong. I'm going off the top of my head here. We can again save this for Tuesday.

When we start talking about 2028 potentially, we don't really know what the interest rates are going to be out there. The fact is that debt interest payments are going up rapidly, from $24 billion last year to $35 billion this year to $45 billion, if my memory serves, next year. We might have a little discussion on that on Tuesday.

With that, I will look for agreement to adjourn.

[Some hon. members]

Agreed.

[The Chair, Conservative, John Williamson]

I wish you all a happy Friday and weekend.

Thank you very much to all our witnesses today. I appreciate it.

We'll see many of you again on Tuesday.