Public Accounts Committee on Nov. 22nd, 2022

[The Chair, Conservative, John Williamson]

I call the meeting to order. I'm sorry for the delay. As you are aware, votes tied us up a little bit.

I'm informed that, pleasantly, we won't lose our time. We still have two hours, so we'll begin right away.

Welcome to meeting number 36 of the House of Commons Standing Committee on Public Accounts.

Pursuant to Standing Order 108(3)(g), the committee is meeting today on its study of the Public Accounts of Canada 2022, referred to the committee on Thursday, October 27, 2022.

I'd now like to welcome back our witnesses from the Office of the Auditor General. We have Karen Hogan, Auditor General of Canada. It's nice to see you again.

We also have Etienne Matte, principal—bonjour, Monsieur Matte—and Chantale Perreault, principal. It's nice to see you all.

From the Department of Finance, we have Michael J. Sabia, deputy minister. It's good to see you. Thank you for joining us today.

We have Nicholas Leswick, the associate deputy minister. Thanks for coming back. We also have Evelyn Dancey, assistant deputy minister, economic policy branch. Thank you as well for being here.

From the Treasury Board Secretariat, we have Roch Huppé, Comptroller General of Canada; Monia Lahaie, assistant comptroller general, financial management sector; and Diane Peressini, executive director, government accounting policy and reporting.

We heard opening remarks previously. I understand that Mr. Huppé has a response for one of our members, so I'm going to give him a couple of minutes right off the top to address that point.

It's over to you, sir.

[Roch Huppé, Comptroller General of Canada, Treasury Board Secretariat]

Thank you, Mr. Chair.

There were actually a couple of takeaways from Friday's meeting. There was one we said we hoped to come back in writing with beforehand, and there was a question from one of the members on the variation as it relates to the passport office spend.

I'm really sorry for not having been able to send that information. We were working with the passport folks and got that information and the analysis completed around noon today. Again, I just want to say I'm sorry about that. We're happy to follow with more details.

One of the more precise questions was around the drop in the salary expenses from 2021 to 2022. The point was that there was a lot more business from a passport perspective done in 2022, so why exactly were there lower salary charges?

Actually, the larger part of the explanation for the higher salary expenses in 2021 is that there was a settlement of some of the collective agreements for PSAC. The retroactive pay for those settlements happened in the year 2020-21. Also linked to those negotiations were some Phoenix damages that were negotiated. Again, those one-time payments were done within 2021.

There was also, in the previous year, a moratorium on the automatic cashing out of annual leave. If they get over a certain threshold, employees get automatically cashed out that excess leave that they have. That was put on hold for a little while, but that moratorium was lifted during that year. Therefore, we've seen these automatic cash-outs get started again.

That's basically the explanation for the close to $7-million drop as it relates to salary expenses.

For the increase in revenues, there was obviously a very big increase, and that's basically as a result of the business going back up. There were a million more passports issued in the last fiscal year, 2021-22, than the previous year.

Again, I'm sorry about not having the capacity to come back on this.

I think there was also a question on special services and an increase in professional services from $212 million to $265 million. That's basically because of the increased volume in business, the difference of an additional one million passports between one year to the other. ESDC plays a very important role in the issuance of passports, and they charge for part of their services at Passport Canada. Again, that's a reflection of the additional business, basically, and the additional charge from ESDC to the passport office.

Hopefully this answers part of your questions.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you.

Could I ask you a quick question?

If the member wants to circle back on that passport question, are you able to answer questions today or would you recommend we wait until you submit that finding? I'm just wondering if we should pre-empt the member if they should ask you or if you have additional knowledge or if....

[Roch Huppé]

I have a card up there of variance analysis, so it would depend....

I welcome the question from the member, to be honest with you, if there's any follow-up. If worse comes to worst, then we'll just take that portion back. We'll be happy to come back in the next few days with a written answer to the question.

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

Mr. Chair, that answered some of my questions, but I had also asked about the significant variation between the estimate and the actual spending in both 2021 and 2022. I asked about the orders of magnitude of difference between the estimate and the actual spending. If you have that answer now or if you want to provide it in writing subsequently, either is fine. I did want to flag that this had been one of the questions I asked as well.

[Roch Huppé]

Thank you.

The difference between the estimate and the actual is basically simply what their expectation was of the business being taken up. As I said, there was a difference of one million passports between 2021 and 2022. They expected the business in 2022 to be even higher than that and perhaps to be even at prepandemic levels, which was not the case. It fell in the middle, I would say.

[The Chair, Conservative, John Williamson]

Thank you.

That was almost a five-minute statement. That's perfect.

I'm going to begin the rounds now.

I turn to you, Mr. McCauley. You have the floor for six minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Witnesses, welcome back to most of you. Mr. Sabia, welcome back from last year.

I'm just wondering, Ms. Hogan, or perhaps Finance, if you could let us know the total provisions from last year and the provisions in the coming two years for losses from ineligible payments for CERB, CEBA and other COVID support programs.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

I can tell you that during our audits, we always audit and do a lot of work around estimates, especially when it comes to provisions and allowances for doubtful accounts. The disclosure is aggregated in the public accounts. The question would have to go either to the comptroller general's office or to the Department of Finance for more details.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

Can I ask Mr. Leswick, for Finance?

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

Is it how they're recorded in the current public accounts that you're looking for?

[Kelly McCauley, Conservative, Edmonton West, AB]

There have been provisions, I assume, for expected losses for ineligible CERB, CEBA and other payments that we will not be able to recover. I'm wondering how much has been written off in this public accounts report and what's been set aside or forecasted for provisions for the next couple of years.

[Nicholas Leswick]

I understand the question.

I think we should start with the first leg of the question, which was about how they're displayed in the current public accounts.

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm not looking for how it's displayed; I'm looking for just a lump sum.

[Nicholas Leswick]

I totally understand what you're looking for. I just want to pass it to the comptroller.

[The Chair, Conservative, John Williamson]

You suggest we go to the comptroller?

[Nicholas Leswick]

Yes, thank you.

[The Chair, Conservative, John Williamson]

Let's do that, Mr. McCauley.

[Roch Huppé]

What has been recorded right now as overpayment as it relates to CERB and EIERB is $5.1 billion, as I mentioned last Friday. There is an allowance that was taken. It's grouped with the overall allowance. If you go to the site of ESDC and CRA and their own financial statements, you can see the aggregated data at a more detailed level.

If my memory serves me right, Mr. McCauley, the two of them together are about $1.2 billion.

[Kelly McCauley, Conservative, Edmonton West, AB]

Are there provisions for CEBA yet? Have we gotten around to auditing that yet?

Are there other losses from other public supports that have perhaps gone to ineligible recipients, or is there money we're not expecting to be repaid?

[Roch Huppé]

Every time there's a loan or receivable, we have to estimate the portion that we think is uncollectible. For CEBA right now, if I'm not mistaken, we have in the loan category about $44 billion registered as a total loan. We have an estimate in the book on the allowance that we take, the portion we estimate that is going to be forgiven.

If you remember, there's a very—

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm not looking for the forgiven, just the bad loans provision.

[Roch Huppé]

In the total allowance there is also a portion that is attributed to bad loans. The portion that is attributed in the book that is estimated at the moment to be forgiven is $13 billion last year and $1.5 billion this year, actually.

[Kelly McCauley, Conservative, Edmonton West, AB]

What about for next year? Are you forecasting it to next year?

[Roch Huppé]

I don't have the forecast for next year. On the public accounts, what we do is take the allowance on the actual—