Public Accounts Committee on Nov. 22nd, 2022

[Kelly McCauley, Conservative, Edmonton West, AB]

I realize that.

Go ahead, Mr. Leswick.

[Nicholas Leswick]

Thank you for the question.

We don't take additional expenses related to any growth in those receivables, so effectively there are no additional expenses. It would be wound up.

[Kelly McCauley, Conservative, Edmonton West, AB]

I want to get back to a question I had last Friday, but perhaps I didn't ask it clearly enough. It's not necessarily public accounts, but it's regarding provisions for funds that will not be able to get clawed back or recouped.

In the advance for the Canada workers benefit in the fiscal update, there's $4 billion that will be advanced for ineligible payments. It is basically being written off in advance. It's not going to be recouped.

Where does the change in policy come in? The money is going to ineligible recipients—we know that—but the government is not going to recoup it. Why is that being treated differently from CERB or other payments?

[Nicholas Leswick]

Thank you for the question. It's a good question.

When the government brings forward the legislation to give the new program design character, it will effectively deem that an entitlement. You will be entitled to an advance payment of the Canada worker benefit in the current year, based on your previous year's income. It's a change in the character of the program, fundamentally.

[Kelly McCauley, Conservative, Edmonton West, AB]

However, it will not be recouped, even if someone's found to be ineligible. The plan is not to recoup it.

Why is there the change? Where does that change come from in policy?

[Nicholas Leswick]

Thank you. It's a good question.

I'd repeat that it's a fundamental change of the program design. The idea of recouping it or being ineligible would not apply under the new legislative design of the program.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's what I'm asking.

Why are we writing off $4 billion for people who are ineligible for that money? People who were ineligible for CERB will have to pay it back, but it's not the same for this program.

[Nicholas Leswick]

There will not be an ineligibility. The program will be restructured so that they will be eligible. It will be an entitlement based on the previous year's income. It's a fundamental restructuring of the program.

[The Chair, Conservative, John Williamson]

Thank you, Mr. McCauley. I'll let you come back to that in your next round.

Ms. Shanahan, you have the floor for six minutes.

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

Thank you, Mr. Chair.

Ms. Hogan, I'll summarize the comments you made about the Public Accounts of Canada. You “found that, in all material respects, the government properly accounted for COVID‑19 measures in its 2021-22 consolidated financial statements”.

You wrote a report on your observations, among which is a paragraph “to draw attention to certain amounts in, and notes to, the consolidated financial statements that described the effects of the COVID‑19 pandemic on the Government of Canada, which were significant. That paragraph does not modify [the OAG's] audit opinion”.

I'd like to hear your comments on this. Is this normal? Clearly, COVID‑19 was a very significant event. Is it normal to have this kind of comment after a recession or another major event?

[Karen Hogan]

The decision to include an additional paragraph in our report is one that is made each year based on the year's events. It's really to draw the reader's attention to the fact that a significant event has had a very major impact on the government's financial statements. We don't think that this approach, which isn't used often, is a change, but is only intended to draw attention. We've used it for two years in a row now, which means that in other years, there were generally only routine events in the government's operations.

This is the very significant impact of the pandemic. We wanted to draw the reader's attention to the related notes, which describe the situation and its effect on the financial statements very well. This is to ensure the reader understands the impact of the pandemic on the financial statements. Next year, we may make the same observation. It will depend on the impact of the pandemic on the 2022-23 financial statements.

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

We're still in a pandemic, and we know full well that it has had an impact on the financial statements. Obviously, if you just look at the numbers, they're changing in a way that we've never seen.

In 20 years, perhaps someone, a reader or an analyst, will analyze the numbers to compare them. How will that person be able to understand these numbers?

[Karen Hogan]

That's exactly why we tried to attract the reader's attention by including this paragraph in our report. If the reader wants to know whether the financial statements are a fair representation of a government's performance, they should read the Auditor General's report. It's in this report that we say that you really should read the notes.

As you mentioned, the pandemic has had an impact on additional government spending, which was $300 billion in 2021. This year, in 2022, that spending will be about $76 billion. Those are big numbers, and that's why we wanted to get the reader's attention.

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

If someone looks just at the figures or the overview, but not the comments, they're not going to be well informed.

I'd now like to come back to something the committee has studied in other, more normal years, and that's the issue of unused funds. We work very hard to ensure that programs are created and implemented in the departments, but there is always money that goes unused.

I imagine that the Department of Finance officials will be able to give me an answer. What are the unused funds and how do they differ from the current amounts available for future years? How is this difference determined, and is it the same for all federal government organizations?

[Nicholas Leswick]

Comptroller General, I might push that to you for a commentary on the current year lapse. Then I can take over in terms of how you would ask a question about how we would project that into the future.

[Roch Huppé]

Thank you for the question.

Basically, as you know—

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

Mr. Huppé, I would appreciate it if you could speak in French, because the constituents in my riding are francophone.

[Roch Huppé]

It's true that you spoke to us in French. I apologize, Mrs. Shanahan.

Federal budgets operate on an annual cycle. As you know, at the beginning of each year, Parliament must approve each institution's budget. However, a department's work doesn't necessarily end on March 31, since some projects are ongoing, for example.

So the institution plans what it thinks it can spend during the year, but it's not unusual for actual expenditures to vary. This doesn't mean that the expenditures aren't made, but perhaps they will only be made the following year.

Sometimes funds are simply not used. For example, this year the amount of money that hasn't been spent is $36 billion, if I remember correctly. The net carry-forward is about $14 billion, which is money that will be frozen and then carried forward to next year's budgets.

Some departments, including Infrastructure Canada, are responsible for—

[The Chair, Conservative, John Williamson]

Mr. Huppé, I'm sorry to interrupt you, but the time is up. However, I'm sure Mrs. Shanahan will have an opportunity to come back to this.

Ms. Sinclair‑Desgagné, you now have the floor for six minutes.

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

Thank you, Mr. Chair.

Again, I'd like to thank the witnesses for being with us.

Mr. Sabia, I'm pleased to see you again, too.

We talked about it at the last meeting and informally even more recently. The performance audits done by the Office of the Auditor General are very important. I'd like to reiterate today the need for such performance audits, particularly on certain programs administered by Crown corporations. Indeed, Crown corporations don't have the same levels of transparency and disclosure of their expenditures as departments. It's therefore more difficult for a citizen to obtain information from them, so the work done by the Office of the Auditor General is essential in this regard.

Previously, there were questions about the Canada Emergency Business Account. We can see that there have been serious problems in the administration of this program. I would very much like to reiterate the need for a performance audit of this program.

I'd also like to focus on one aspect of the Auditor General's report, accounting standards. Canada doesn't yet require organizations to report on their compliance with environmental, social and governance criteria, ESG criteria, or on sustainable development.

Madam Auditor General, how do you explain the fact that compliance with these standards is not yet mandatory in a country that has fairly ambitious objectives in the fight against climate change? Could you also tell us how ESG criteria could help in that fight?

[Karen Hogan]

That's an excellent question. International accounting standards adjust more quickly than they do in Canada. When new standards are created, Canada follows what is done internationally.

That said, the government does have legislation that requires departments and Crown corporations to be accountable for certain environmental measures. That's why my office puts a lot of emphasis on sustainable development goals and why we encourage all departments to move in that direction. In our special examinations, we have begun to encourage Crown corporations to consider these requirements.

In terms of establishing government accounting standards, the comptroller general could tell you better whether there are plans to put this in place or whether Canada will wait for public sector standards to catch up with international requirements.

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

That's excellent.

Mr. Huppé, Ms. Hogan just directed part of my question to you.

[Roch Huppé]

The Auditor General has clearly identified that a lot of work is being done internationally, and even in Canada. So CPA Canada is starting to look at these international standards and is in the process of deciding whether to follow them or adapt them.

As for us, we're monitoring the issue closely, and we are looking at different ways of reporting in more detail, even though the standards are not fully established. These will be important in determining the way forward.

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

Indeed. We read that Canada lags behind many other countries or even multilateral development banks that have already prepared international standards.

For example, when I worked at the European Investment Bank, it had already been incorporating a social cost for carbon in its projects since the early 2000s. Here, some Crown corporations act like banks, but have not yet adopted any standards.

In practical terms, will the Treasury Board Secretariat begin to call for the integration of standards?

[Roch Huppé]

Obviously, we can only get involved, which I personally do in relation with the possible development of standards. As I said, they will allow us to make more formal adjustments. That said, our environmental objectives are already the subject of a lot of reporting by various departments.

As I said earlier, from an accounting perspective, we were ready to take note of what's happening abroad and with some of our partners to try to adjust and be as proactive as possible, since we don't have any standards at the moment.