Evidence of meeting #51 for Public Accounts in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was budget.
A recording is available from Parliament.
Bloc
Maxime Blanchette-Joncas Bloc Rimouski-Neigette—Mitis—Matapédia—Les Basques, QC
I understand. Thank you.
Mr. Robson, I'll continue the discussion with you.
You recommended that the public accounts be published no later than September 30. Should the committee recommend enshrining that timeline in legislation so that parliamentarians can review the results and so on before the budget is tabled in November?
President Emeritus, C.D. Howe Institute, As an Individual
I think the federal government should move its legislated deadline for presenting the public accounts up from the end of the year. As my colleague mentioned, it's a very difficult undertaking—that's understood—for the federal government to produce these numbers. It's a large, complex organization, but as I said already, many provinces and territories are able to get their public accounts many months earlier than the federal government does. Although they might appear simple from a federal perspective, they are quite complex in their own eyes, and they don't have the same resources that the federal government does to draw the numbers together.
I think that would make a lot of sense. I think it would enable the public accounts committee to look at the numbers while they are still fresh and address some of the things, including the potential discrepancies you addressed with your earlier question to Nick, and the public accounts committee would find that its work had more traction.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Thank you, Chair.
Mr. Robson, it's nice to see you. Thanks for appearing today.
On your fiscal accountability report card, you gave the federal government a D last year. Where do you think we are going? Are things getting better or worse for accountability, according to your report?
President Emeritus, C.D. Howe Institute, As an Individual
Well, the federal government has not shone on that report card lately with the failure to present budgets in a couple of years, essentially guaranteeing a failing grade. We mark the budget presentation quite heavily. If there isn't a budget, there's nothing to give anything other than a zero to.
The move to a fall budget cycle will make a big difference. A budget that's presented several months before the beginning of the fiscal year is much better for accountability. The federal government's marks are likely to improve in that respect. One thing we would also like to see, prefigured in answers to other questions, is better alignment between the estimates and the fiscal framework. We would also like to see some tidying up of the way the federal government presents a few items.
In general, I'll go back to what I said earlier about the federal government having historically been a leader in improving financial presentations. It would be very nice to see the federal government back at the top of the class.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Right now it's not, though. It's near the bottom.
Is that yes, no...?
President Emeritus, C.D. Howe Institute, As an Individual
Oh, yes. Well, you have the report in front of you from last year. The federal government's effective failure to produce a budget for the fiscal year that we're now in is also a major mark against it. There will be some bad marks for the federal government in this report going forward. As I say, the new budget cycle will be an improvement, but that won't show up in the report card until the iteration after this. We always look at the most recent budget round and the public accounts that are out already.
The federal government does have some room to improve.
Conservative
Kelly McCauley Conservative Edmonton West, AB
I'm glad you brought up the 2015 issue. We actually studied this. The Treasury Board president at the time said that to align the budget with the estimates would be a waste of time and be busywork for MPs, and it would be too difficult to make bureaucrats work over vacation time. I'm glad we've seen some change.
I want to bring up your concern in your report card on public accounts about the discount rate for how they're doing the funded portion of the public service pension plan. It's an issue I've been at for about 15 years now. What do you think of the government's using such a high discount rate for the funded portion but just the lower standard rates for the unfinanced portion of the pension?
President Emeritus, C.D. Howe Institute, As an Individual
It's a bit of a problem for any pension plan in the public sector or the private sector to discount its liabilities at an assumed rate of return. That is at the root of this problem with the federal government's pension accounting. It's one of the reasons that year after year we have had a negative figure, adding to the accumulated deficit below the bottom line. The liabilities were originally discounted at a high rate, so as they come closer to actually becoming cash payments, you then discount them at the government bond rate. Suddenly the amount you had in the past isn't enough.
I would very much encourage a further cleaning up of that item. It's very opaque. I doubt that many in the room are as seized with it as I am, but it affects the MPs' pension plan as well. I mean, all these liabilities ought to be shown at the interest rate at which the federal government borrows from everybody—
October 26th, 2026 / 4:25 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
If I can interrupt, if the government showed it at the real bond rate instead of what I believe is an artificially high discount rate, how much would that add to our projected debt numbers?
President Emeritus, C.D. Howe Institute, As an Individual
I do not have a current estimate of that, but it's in the tens of billions of dollars. It's a substantial amount.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Do you think Canadians are served by having this show so high?
One of the reasons I bring this up is that I recall a report that was being done on PSAB. Treasury Board justified using an artificially high discount rate because—this was their comment—they have high returns because they take higher risks in their investments, but they can take higher risks because taxpayers are on the hook for their guaranteed pension payouts. Does that kind of attitude concern you?
President Emeritus, C.D. Howe Institute, As an Individual
Well, it's very asymmetrical that the employees would get the upside but the taxpayer would get the downside.
It's a tough area. I would much prefer to see, since you're asking the question about the pensions, better current compensation for federal employees, including MPs, and then a pension plan that was less opaque, perhaps even a group RRSP.
Conservative
Liberal
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
Thank you, Chair.
In the opening remarks, there was discussion about making the estimates easier to reconcile with the budget. Of course, in later discussion, we've heard that you'd like to see the estimates released simultaneously with the budget. Is that appropriate? Can you tell me what the chief challenges would be in doing that?
President Emeritus, C.D. Howe Institute, As an Individual
Perhaps it would be interesting to get Scott Brison to appear in front of the committee to talk about why his ambition to make that happen did not come to fruition.
I frankly don't understand why it was so difficult as to be effectively impossible. I've already said that many governments in Canada do it. In the Atlantic region, it's typical practice to release the estimates simultaneously with the budget.
Of course, at some point, you're going to have to reconcile them. The phrase “busywork” for bureaucrats was mentioned earlier. At some point, you're going to have to do the reconciliation, because you have to have everything consistent with the public accounts. I don't see why it's harder at the time than it is after the fact.
I've frankly never understood the reasons why the federal government could not do that, because, as I've said already, we have provinces that do it. There are governments elsewhere in the world with parliamentary systems similar to ours that do it. I think it's a practical possibility, and it's partly just a matter of MPs saying, “Give us numbers that are easier to understand, because it makes it easier for us to do our job.”
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
What would be the first step we'd have to take if we wanted to achieve that?
President Emeritus, C.D. Howe Institute, As an Individual
Well, the reconciliation of the estimates to the fiscal plan is a task that the federal government already performs, but it could be done in a much simpler way, because what you want to do when you're voting a dollar of spending is to understand if it is consistent or not with the overall fiscal framework, and there are ways of presenting that information that are quite a bit clearer.
I hedged a bit on the question of doing it simultaneously. If the budgets are going to continue to appear in, say, November of the year before the fiscal year starts, then you can argue that the estimates can't be presented simultaneously, but I would still say that they ought to be presented in a way that makes it very clear to parliamentarians whether or not, if they vote for a particular appropriation, it is consistent with the fiscal plan.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
We've also heard that you'd like to see the public accounts tabled by June 30. Is this a related kind of problem? Would having these estimates and budgets be simultaneous in any way facilitate that?
President Emeritus, C.D. Howe Institute, As an Individual
There's no direct connection between the two. The recommendation to publish the public accounts earlier is partly a matter of accountability. You're serving up the meal hot rather than cold. It's more appetizing for people to dig into.
Also, as Nick said already, it encourages the faster gathering of the information. Some of these mechanical tasks are tedious for people. If there's no particular push on them to do it, they may let the summer vacation get in the way, but it has to be done sooner or later, and documenting what you've been doing usually doesn't get any easier with the passage of time.
I think it would, actually, in the long run, prove to be simpler. Federal government representatives can talk to their counterparts in Alberta and Saskatchewan, say, which are very timely with their public accounts, and ask if it is actually harder to do it quickly. I think the answer would be, “No, it's easier.”
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
I'm coming at this as a computer programmer, not as an accountant. You can probably tell that.
There was discussion earlier about the difference between net debt and total debt. Maybe you could walk me through that and through problems with debt servicing.
President Emeritus, C.D. Howe Institute, As an Individual
The total debt of the federal government, if you look at the projections in the latest update in the spring economic update.... I'll be looking very carefully when the next budget comes out to see what the projections are. The gross debt is now, as you look into the out years, projected to rise above $3 trillion. That is a lot higher than the net debt figure that is the headline figure in budgets and in the public accounts, because it is the gross amount, and there are a lot of financial assets that the federal government is building up over time.
If you look at the financing requirement lately and in the projections, it's a lot bigger than the deficit. The reason is that they're borrowing in order to accumulate these financial assets through Crown corporations and so on.
The concern that I have is about the value of those assets. Is every dollar that's shown as a federal financial asset really a dollar that ought to be shown on the balance sheet? If some of these loans are being made at concessional rates, or if some of the loans are being made to entities that are going to have trouble repaying them, then we ought to be showing that as expense. It ought to be showing in the deficit. It ought to be showing in the regular debt number.
We do want to pay attention to what's going on with the federal balance sheet.
You said yourself that—
