Public Accounts Committee on Oct. 26th, 2026

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Mitis—Matapédia—Les Basques, QC]

The question is for both of you.

Would you say that the example you gave is the biggest failure in our ability to audit how the federal government spends taxpayers' money?

[William Robson]

I've already mentioned timeliness, but, because it's so important, I will mention it again. The federal government has actually failed to deliver budgets for a couple of fiscal years during this decade, which is an unprecedented fail. It is a straightforward hole in accountability when it comes to parliamentarians and other Canadians being able to monitor what it's doing.

The fact that the federal government is now on a fall budget cycle looks as though it's going to be able to repair that. Again, I apologize for repeating it, but it's worth underlining. We do need to make sure that the public accounts come out on a more timely basis. We want them to continue to have clean audits, and we'd like them to come out in the fall, well ahead of the budget, because, if you have a budget ahead of the public accounts, then you're two years out of sync with what the current data are.

There's a real problem with old numbers. They're just not as exciting. It's harder for parliamentarians to motivate people to pay attention to them, so timeliness is a big deal. As Nick mentioned in his comments, it's a red flag if results are late. We'd like to see the federal government be timelier. Most of the provinces and territories are well ahead of it when it comes to publishing their public accounts.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Mitis—Matapédia—Les Basques, QC]

Thank you, Mr. Robson. I'll continue with you.

In Public Accounts of Canada 2025, there's a $6.1-billion increase in federal debt charges. If the federal government reduces its transfers, particularly to fix its public finances, do you think it risks shifting the financial pressure onto the shoulders of Quebec and the provinces, which must continue to provide their services?

[William Robson]

Anyone who remembers what happened in the 1990s will remember that one of the biggest targets for federal spending cuts when the federal government got into fiscal trouble back then were transfers to other levels of government. A number of provinces found that their budgetary plans were thrown badly out of line by the withdrawal of the federal government support they had built in.

That is a vulnerability that we should remember as we watch the federal government's debt servicing costs grow, because it's, I think, inevitable that, if the federal government starts to feel fiscal pressure along the lines of what we had in the 1990s, it will be transfers to the provinces that will be one of the major areas that they will have to cut. It's not because it's necessarily the first place they want to go but because those transfers are very big and, when you're under a lot of fiscal pressure, you're going to have to cut the big things.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Mitis—Matapédia—Les Basques, QC]

I will continue along the same lines.

For example, if Quebec wants to maintain its services but is unable to increase its revenue, it will be under financial pressure because federal government transfers have been reduced. Could this contribute to a lowering of Quebec's credit rating, for example, as we've seen in recent years?

[William Robson]

I think that the evidence, when you look at credit ratings and how they've changed over time, is that credit raters do, in a sense, put Canadian governments in the same boat. They're not all equally far above the waterline in that boat, but there is a presumption that the federal government's potential support of a provincial government in the event of fiscal pressure does factor into the credit ratings.

Another way of putting it is that the federal government is in many ways the best credit in the country. It's the national sovereign, and it has the central bank, so the provinces' credit ratings and the debt service costs that they pay, the interest rate that they pay, are all going to be benchmarked off the federal government. When the federal government's credit rating improves, everybody's credit rating improves. When the federal government's credit rating deteriorates, everybody's credit rating deteriorates.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

Now for the second round, for five minutes, we start with Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Madam Chair.

Thank you to our witnesses for coming here today.

Your research has identified problems with the way the federal budgets and estimates are presented, and, in fact, you state that it makes it difficult to reconcile spending.

How difficult do you think it is for the average MP to process the way the estimates and the budgets are presented?

[William Robson]

It's hard to speak for the average MP, not having been one myself. However, I recall that, back in 2015, there was a platform plank that the estimates were going to be presented simultaneously with the budget and reconciled with the budget. For a fiscal policy nerd, this was terrific news. Many provinces do it. I've never understood why the federal government does not. There are other countries with parliamentary systems similar to ours that do present their estimates at the same time as their budgets and consistently with them. I think that would be a great idea.

I think it is unnecessarily mentally taxing for people to see two sets of figures that are not on the same accounting basis and are not that well reconciled. It really shouldn't be necessary to reconcile them at all.

I would encourage parliamentarians to keep the heat on the federal government, because why not produce the estimates at the same time with the same accounting basis as the rest of the budget, which is consistent with the public accounts? There are many provinces that do it. They present them simultaneously, and they are reconciled. If they can do it, I don't see why the federal government cannot.

[Ted Falk, Conservative, Provencher, MB]

Thank you. You've answered my second question as well, which is about how we could improve the process. I think you've identified that.

It used to be that the federal budgets and estimates were presented on a two-column basis. Either it was revenue or it was spending. This current Liberal government has introduced a third column now, which it calls assets. It's still not really in keeping with GAAP principles. We're missing that fourth page.

Do you think having a three-column presentation is to the public's or parliamentarians' advantage, or is it just to the government's advantage, to cover up some spending?

[William Robson]

It seems to put two things close together that really ought to be more separate. I can argue either way on that.

You've already heard me say I think it's important for parliamentarians to pay more attention than has been necessary in the past to the overall federal government balance sheet. However, the estimates are quite clearly for the purpose of voting on specific spending items.

If it's a matter of reconciling the estimates to the overall budget so that it's clear how each individual spending item fits into the overall fiscal plan, that's one thing, but if it's presenting information that's not directly germane to the task of approving specific spending items, then I wouldn't be supportive of it.

[Ted Falk, Conservative, Provencher, MB]

The Prime Minister has moved to a three-column system of presenting budgets. Do you think there would be any merit in going to a four-column system, where we would have liabilities and retained earnings, or do you think that would be difficult to achieve at the federal level?

[William Robson]

I'll speak again in favour of the overall public accounts presentation with the public sector accounting standards that have evolved to date. It gives all of that information. You have the current revenues and the current expenses, and those include the amortization of capital and the current expenses. You also have a reconciliation of the bottom line, with the annual results and what happens to federal government assets and liabilities in the accumulated deficit. It's a very good framework.

What I think would be very nice, which my colleague Nicholas Dahir mentioned, is elevating some of that stuff right up to the front of the public accounts. What we would very much like to see is a similar presentation in budgets—

[Ted Falk, Conservative, Provencher, MB]

I'd like to quickly get one more question in.

It's not easy to identify the debt we hold as a country or to whom we owe the money. Would there be a good reason to start including that?

[William Robson]

I would be wary of doing that, because it's too common. Sometimes you see this internationally, where people look at the assets of the Canada and Quebec pension plans, for example, and net them against the debts of the federal and provincial governments as though that money were available to help them service their debts. The assets and liabilities that get rolled together when we look at the international set-up aren't necessarily helpful for thinking about the federal government's own situation. You don't want people thinking about the Canada pension plan as an asset of the federal government. It is not.

In general, I think we do a nice job of keeping those things separate. As I have said a couple of times already, I think the current federal reporting through the public accounts is actually at a very high standard. What we ought to be doing is enhancing the profile of that and not mixing it up with other things.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

We'll go to Mr. Osborne for five minutes.

[Tom Osborne, Liberal, Cape Spear—Mount Pearl—Paradise, NL]

Thank you.

I thank you for being here. I think your presence here is important.

There are a couple of things I wanted to touch on. You talked about the importance of Canada's credit rating and how that is connected to the provinces. We have the strongest credit rating in the world when you look at the other G7 countries.

Going back to your comment about how important the national credit rating is, can you speak to the fact that we have the strongest credit rating in the world?

[William Robson]

It's a very great asset for us, and it's one we should be preserving. I only wish it could protect us better from what is happening to global interest rates as a result of the fiscal problems, particularly in the United States, as well as some of the things we are seeing in Europe. The other major sovereign debtors have fiscal problems that, in many ways, are worse than ours. Even when we are better than they are, it is still raising the overall level of interest rates around the world.

We protect ourselves with our past good behaviour, and we should be mindful of that.

I've mentioned already—and perhaps it's worth going back to quickly—that the cost of servicing the federal government's gross debt is what is affecting us when it comes to the expenses we have to make as we roll the debt over and we pay debt servicing charges on it. It would be a good idea for us to limit that vulnerability by not piling up so much debt. That would leave us in an even better relative position, which is very much something to be wished for, especially if interest rates are going up around the world.

[Tom Osborne, Liberal, Cape Spear—Mount Pearl—Paradise, NL]

Looking at that, and I do want to go back to the reporting on public accounts, some of the folks—the former PBO, for example, and Bloomberg and others—talk about the importance of what Canada is doing right now. I think one of them said gambling on itself and building big projects. You talked a bit earlier about the projects that will allow us to get our products to the global market and that build the economy.

Isn't it important at this stage, with the geopolitical uncertainty and the trade uncertainty, to actually take the position that Canada is taking and invest big in these projects, which does cost money? We have the fiscal capacity to do that, perhaps better than anybody in the world, based on our credit rating.

[William Robson]

It's a very good instinct to do the things that you've just been mentioning. We want to build up our infrastructure. We want to build up our defence capacity.

My criticism of the federal government's fiscal course recently is that it hasn't faced some of the trade-offs as squarely as it might have. If you're giving gas tax holidays, for example, or GST holidays, it's sending quite a different message about what you're using your fiscal capacity for. Rather than enhancing your ability to trade with the rest of the world and internally, and rather than enhancing your security, you're encouraging consumption in the day.

That's the difficulty I have. It's not with the increased focus on capital and infrastructure, which I think is entirely appropriate. It's not with some of the steps that have been taken to enhance private sector investment. It's that we haven't faced squarely up to the idea that you really do have to make more choices and maybe keep the federal government's operating expenses better under control, for example, as you're making these big investments on the infrastructure side.

[Tom Osborne, Liberal, Cape Spear—Mount Pearl—Paradise, NL]

I appreciate that comment as well, but I just want to maybe challenge a little, if that's the right word. I know we shouldn't challenge witnesses.

In terms of the tax holidays and so on, while we are waiting for Canada's economy to strengthen and to take advantage of these generational investments, isn't it also wise, in a time of geopolitical uncertainty, with the cost of groceries, gasoline and other goods as a result of the war in the Strait of Hormuz, to provide some relief to citizens as well? Without that, the economy slows.

[William Robson]

I understand the impulse to do it, but I think it's a problem to make policy in that way. This is because some of those things are very hard to sustain, but they're also politically very hard to unwind, as we just saw with the extension of the gas tax holiday. I think that it's possible for the federal government to make an even stronger case than it's been doing.

It's been making a strong case that we need to make the real investments: the investments in infrastructure, the investments in trade-oriented infrastructure, and encouraging major projects to go ahead, for example. I think it's possible to make that case and at the same time be a bit more disciplined when it comes to some of the transfer payments and some of the operating costs, because that's how you preserve your fiscal advantage.

I am concerned that the federal government—

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

Thank you.

Mr. Blanchette‑Joncas, you have the floor for two and a half minutes.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Mitis—Matapédia—Les Basques, QC]

Thank you.

Mr. Dahir, in your analysis, do the federal documents clearly distinguish between the discrepancies in the initial budget due to government decisions and those resulting from economic changes or accounting adjustments?

[Nicholas Dahir]

Ideally, from a transparency perspective, what we ask for is that the numbers that appeared in the original budget document appear alongside the results at the end of the year. I will also note the government's move to a fall budget does leave some question about what the 2026 public accounts will compare to.

However, your question is on in-year changes. Many governments simply restate the budget projections due to the events that happen during the year, but it's much better when governments present a reconciliation of these restatements, again, all drawing back to the original budget documents. When restatements happen in between actual documents, it represents a very significant barrier for our conceptual non-expert reader in assessing the fiscal story of the government for the year.