Public Accounts Committee on Feb. 9th, 2026

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

I would like to quickly go back to the amount of $1.9 billion that was withdrawn from the public service pension fund because the assets exceeded the liability. We are talking about unauthorized surpluses. However, cuts were made under Stephen Harper because the fund was in deficit.

Why did you not enhance the pension plans?

What are we going to do with the contributions made by public service employees?

[Annie Boudreau]

The amount you are referring to, the $1.9 billion, is for 2024. The amount was put in the consolidated revenue account, as it is called, pending discussion by the government with stakeholders.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much.

We are beginning the second round of questions.

Mr. Deltell, you have the floor for five minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

Thank you very much, Mr. Chair.

Good morning to my colleagues.

Ladies and gentlemen, welcome to our committee. Thank you for the work you do in Canada's public finances, whether at the Office of the Auditor General, the Department of Finance or Treasury Board.

You have a very important role to play, because the people listening to us also have a budget to manage, their personal budget. No one can do that by living on their credit card all the time. That is what we are seeing in Canada right now. We have seen that the debt has more than doubled in the last 10 years. We have also seen that a deficit has been added this year that is higher than what was forecast last year under the former prime minister. Sooner or later, we have to pay.

I am going to speak to those who are listening to us. We know that, as we speak, every penny you pay for the goods and services tax, or GST, does not give you any federal services. It is only going to service the debt, and even then, we are starting to get tight. Now we have just added a deficit of nearly $80 billion, which is much higher than what was announced last year.

Mr. Leswick, what is the impact of an $80 billion deficit on public finances?

For the people listening to us, what parallel can you draw with their personal lives?

[Nick Leswick]

On the cost of $80 billion at the effective interest rate of 3% annually, I can't do the mental math in my head. I feel like I'm failing the committee, but there's obviously an uptick in public debt charges associated with that increased borrowing.

I'll leave it at that without embarrassing myself.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

I don't find it very funny when we know that our grandchildren will have to pay for that.

[Nick Leswick]

I'm sorry, sir. I wasn't trying to make a joke of it. I was trying to make a joke of my mental math.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

I know that, but as long as we cannot control our deficit and our debt, our children, our grandchildren and those who are not born yet will have to pay for that. That's enough.

Mr. Chair, need I remind you that the Liberal government and its finance minister, Paul Martin, had managed to balance the budget in the provinces.

We remember that 10 years ago, Prime Minister Harper tabled a balanced budget. Just to remind you, in the House of Commons, look at the painting of Prime Minister Harper. He is holding the expenditure control document with the balanced budget. I hope he will not be the last prime minister to balance the budget.

I will ask you again, Mr. Leswick. When you are living on a credit card all the time, when the money collected with the GST is barely enough to just pay the interest on the debt, you are headed for a wall.

Do you not think?

[Nick Leswick]

I would support the sentiment that we need to be very mindful of Canada's federal credit rating. We need to keep deficits in check.

In that context, the government has put forward two fiscal anchors in its most recent budget: supporting a declining deficit-to-GDP ratio and an operating balance by the 2028-29 fiscal year.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

Ms. Hogan, you said earlier that the Department of National Defence fell short in its accounting by overestimating or underestimating expenditures, depending on how we look at things, and the amount involved is $846 million.

You mentioned that in your remarks. We understand that the Department of National Defence spends a lot of money, but it makes no sense to have misplaced $846 million. Yet that is what you found out.

What kind of message does that send to other departments?

Is it likely that huge amounts like that could be misplaced in other departments as well, and that it could start adding up?

[Karen Hogan]

I just want to clarify. The Department of National Defence did not lose the $846 million. It is really the way it accounts for expenditures that concerns us. These were expenses related to the next fiscal year, but the accounting was not done properly.

That concerns me, because we should be trying our best to do things right the first time we record an expense or receive a bill. We should not rely on a second review. That is why we raised it. We think it is important for the Department of National Defence to improve the management of its accounting records, since its expenditures are going to increase, according to projections.

So it is not money lost. It is just money that had not been properly accounted for in the fiscal year.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

That is more or less what I meant when I said that the money was misplaced. I did not say that it was lost or that it was anything else. It is just that the expenses were not properly accounted for.

In closing, what worries me is that, if you discovered that issue at the Department of National Defence, there is no reason to believe that the same situation could not have occurred in other departments. At some point, it becomes difficult to rely on the financial records.

[The Chair, Conservative, John Williamson]

Thank you very much, Mr. Deltell.

Ms. Yip, you have the floor for five minutes, please.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you, Chair.

Thank you, Ms. Hogan and your entire very large team, for producing the public accounts. That's a lot of work.

In your opening statement, you mentioned that in both the 2024 and 2025 commentaries, there were ongoing problems with pay administration and deficiencies in IT general controls over some key government systems such as process payments. What were the problems?

[Karen Hogan]

There are two angles there.

When it comes to pay for individuals who work in the public service, as you'll recall, when there was a transformation of the HR-to-pay systems and Phoenix was put into place, there were many pay issues. Some of those pay issues remain.

What we highlight here is that it isn't about Phoenix itself not calculating people's salary but that a significant portion of the errors we continue to find are data entry errors or delays in entering things—for example, promotions, acting pays and so on. That's about fixing the process even before things are entered into an IT system.

That would be the first issue, and that's ongoing. I think the big concern is that, as the government is moving towards modernizing pay and changing the Phoenix pay system, you have to fix all of these errors before you put them into a new system, because bad data will still result in errors in people's pay. It's important to fix all of that before a new system is put into place.

The second issue has to do with IT issues. This is a new issue we've found in the last couple of years. It's important because you want to properly manage control over important IT systems in the public service. We found that many users had access to systems they did not need in order to carry out their functions. While we were able to do work to make sure they didn't do anything they shouldn't have done, like perhaps changing numbers in error, it is still a risk, and it does create inefficiencies for our audit and for the government.

This is where we need Shared Services to start working on some of the recommendations that we've given them to improve IT general computer controls, especially when they provide lots of services to the broader public service. It's something we're going to keep monitoring, because in the vein of being more efficient in delivering audits, we need to be able to rely on IT computer controls to have a faster and more effective audit.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Has that impacted your work?

[Karen Hogan]

It's impacted our work in that it creates more work for us to do. When there's a weakness and a superuser who can do many things and can conflict roles in the financial system, we need to carry out procedures to make sure they haven't done that so we can still rely on the information in the systems.

It does create inefficiencies for us, but it would also provide more assurance to departments and agencies if the IT general computer controls had all of these weaknesses fixed. That's why we continue to work closely with Shared Services Canada to work on those.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Ms. Boudreau, do you have any comments on this?

[Annie Boudreau]

Yes, I do.

First, I want to thank the AG. As mentioned in her commentary on page 27 of the English version, the AG did not find any appropriate changes made to data or any data breaches because of inappropriate access.

Having said that, we are working very closely with Shared Services Canada. We know they have an action plan, and they're going to be monitoring that action plan. In addition, they requested from their internal audit shop an audit on privilege access management, and that audit will focus on privilege access management. We will be receiving a copy of it as well.

That audit was made public, and we're going to be following up again if we find any discrepancies.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Ms. Hogan, do you find that adequate?

[Karen Hogan]

I think it's a step in the right direction, absolutely.

The best ultimate fix is to better manage and control access to IT systems, especially important systems like the standard payment system, which generates all payments that the Government of Canada issues.

While it's good to identify weaknesses, the ultimate goal is to just fix all of these IT weaknesses and eliminate them.

[The Chair, Conservative, John Williamson]

Thank you, Ms. Yip. That is your time.

Mr. Lemire, you have the floor for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Obviously, everyone who knows their history knows very well that the great partnership did not start on the Plains of Abraham with a conquest, but with the Act of Union, when the English wanted their debts to be paid by the French. That reading of history cannot be disproven. Obviously, the public accounts lead us to reflect on this aspect.

We see that debt charges have increased by $6.1 billion compared to the last fiscal year, where they amounted to $52.6 billion. In 10 years, the Liberal government has doubled its interest on the debt, from $21.8 billion to $53.4 billion. An amount equivalent to one third of the Quebec government's budget is used to pay the interest on the federal debt. That may be one of the best arguments for why Quebec will never be able to separate: because the federal debt will weigh heavily on our shoulders.

That said, how much revenue does the government receive from the GST?

Every time a person goes to a convenience store, whether they buy a good or a service, the government receives revenue. I will give you the answer to my question. It is $50 billion.

Basically, every time a consumer pays the GST, if we make an equivalency rule, they pay the debt service, including interests.

Have we lost control?

[Nick Leswick]

I'm sorry. I don't know if I understand the question. Does that mean we've lost control? I don't know how to respond to that.