Public Accounts Committee on Oct. 26th, 2026

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

I call this meeting to order.

Welcome to meeting number 51 of the Standing Committee on Public Accounts. Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room and remotely using the Zoom application.

Pursuant to Standing Order 108(3)(g) of the Standing Orders, the committee is resuming consideration of “Public Accounts of Canada 2024”, and “Public Accounts of Canada 2025”, referred to the committee on Tuesday, December 17, 2024 and Friday, November 17, 2025.

I would like to remind members of the following points.

Please wait until I recognize you by name before speaking. All comments should be addressed through the chair.

I would like to remind witnesses that committee members may ask questions in either French or English. If you will need interpretation, please take a moment now to prepare your earpiece and select the listening channel you need in advance, in order to take full advantage of the time allotted for questions and answers.

I would now like to welcome our witnesses.

We have, as an individual, William Robson, president emeritus, C.D. Howe Institute, by video conference. From the C.D. Howe Institute, we have Nicholas Dahir, research officer, by video conference.

Mr. Robson, the floor is yours for your opening statement.

[William Robson, President Emeritus, C.D. Howe Institute, As an Individual]

Thank you very much for having us at the meeting today. We hope that our questions and responses will be helpful to you in your work.

We look forward to your questions. To provide some context for our possible responses, we have some opening remarks about the motives and main themes of the C.D. Howe Institute's annual fiscal accountability report card.

At a high level, our report tries to capture in a letter grade the extent to which government budgets, estimates and public accounts help elected representatives and voters understand governments' capacities to deliver services, and how plans and events during a year will enhance or degrade that capacity.

The way we have divided this is that I get to start with some compliments, and my colleague Nick will pick up with some complaints.

On the positive side, I'm glad to say that Canada's senior governments have tended to provide better information over time, thanks to the establishment of public sector accounting standards, the improvement of public sector accounting standards over time and closer adherence to public sector accounting standards over time. The federal government has often led those improvements.

However, gaps remain, and backsliding is a constant threat. We have too many instances of information that is hard to find, obscure or even misleading and late. The federal public accounts generally get good scores in our report card, but we would like the federal government—the most economically important government in the country and the one whose fiscal practices affect all Canadians most strongly—to be at the head of the class.

I will now turn it over to my colleague Nick for some comments on what needs to happen. Thank you.

[Nicholas Dahir, Research Officer, C.D. Howe Institute]

Thank you, Bill.

It's my duty to go over some of the problems with the federal public accounts.

One problem is timeliness. It is now late October. The 2025-26 fiscal year ended almost seven months ago. Other senior governments have produced their public accounts—some as early as three months after their fiscal year ended. The government is set to present a budget next week. We should have the results for 2025-26 by now.

In the private sector, late financial results are a red flag. Companies listed on Canada's main stock exchanges have to produce their results no more than three months after their year ends. Our securities regulators meet that same timeline.

We should get results while they are fresh and parliamentarians are better positioned to react to any problems they reveal. Faster publication will prompt faster data gathering, which will help the budget planning process and help other organizations, including other senior governments, make their own fiscal plans. We think December 31 is too late a deadline for the production of federal public accounts and would encourage the government to produce them much sooner, ideally by June 30 and no later than September 30.

With respect to the presentation of information in federal public accounts, we do have some criticisms. We think the main presentations should match other presentations that show all pension expenses as part of compensation, rather than having an obscure amortization entry below the highlighted deficit line. We would encourage placement of the main table closer to the front page.

More substantively, we are concerned that changes in the definitive measure of the federal government's capacity to deliver services—its accumulated deficit—which is revealed in the public accounts, are too different from the reported deficit figure and from the deficit prefigured in the annual budget.

These issues are becoming more consequential. Governments face fiscal pressures following the pandemic, trade uncertainty, rising costs associated with an aging population and revenues constrained by slower economic growth. Fiscal concerns are a key reason why government bond yields have been rising recently and adding to these pressures. In this environment, understanding governments' true financial position and the sustainability of their spending commitments is increasingly important.

We would be glad to take your questions on those issues and any other issues related to the public accounts and federal government financial documents that can help you in your work.

Thank you.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

Now, for the first round of six minutes each, we will start off with Mr. Stevenson.

[William Stevenson, Conservative, Yellowhead, AB]

Thank you, Chair.

Thanks to our guests for being here today. It's important that they give us the reality of what we want to know instead of some of the spin that we get from the government spending.

Can either of the guests speak to how the timing of these projections and the fiscal updates are going to create different forecasts for what they're going to change going forward in the future? When you recommend it to Parliament, we can hold ministers accountable for their spending forecasts, but their timing is a bit of a problem for us. I think Nicholas alluded to that in his opening remarks.

[William Robson]

Nick, since you're muted I'll jump in and say there are a couple of things that might be relevant here.

One of them is the new timing of the budget. If we are on a fall budget cycle, which we commend, I think it's a very good thing to have a budget presented well in advance of the beginning of the fiscal year, which the federal government used to do regularly but has not done regularly. The fact that the budget is now coming in the fall means that you really need the public accounts out before the budget. It's a very tight timeline, and that seems to us to be a problem if the public accounts continue to come as late as they have lately.

The other thing I'll mention quickly, because I'm not sure how central this was to the question, is that we would certainly like to see the estimates presented. Maybe it's hard to do simultaneously with the budget now that it's on a fall cycle, but it would be very good if the estimates themselves were easier to reconcile with the budget and if the process by which they are approved was also a bit more transparent to legislators and the public. That would help parliamentarians keep track of what's going on with the spending side.

[William Stevenson, Conservative, Yellowhead, AB]

Thank you.

From the accounting and fiscal sustainability perspective, how concerned should we be about the federal debt servicing costs? How would you recommend the government publish cleaner measures for how much tax revenue is being consumed by the interest payments for each year?

[William Robson]

One of the things that have troubled me over the last few years is that we have been paying attention to the net debt—that's all of the government's liabilities minus its assets—but the cost of servicing the debt is a gross interest number that shows up in the budget. It's comparing apples and oranges when you look at those two things, because the federal government's debt servicing costs are a function of its total debt, not the net debt that you see at the bottom line of the budgets.

What's been happening over the last few years is the government has also been financing a large number of its operations through additions to the asset side of its balance sheet. In other words, they're making loans and advances. They don't show up in the deficit, but that debt does need to be serviced, and the return on those investments, which is not a number that gets much attention, has been quite low relative to the financial assets.

It's very important to pay attention to the total amount of debt, not just the net debt that's at the bottom line of the public accounts and the budgets, because that's what we're paying interest on, and those costs are going up faster than the investment return on the government's financial assets.

[William Stevenson, Conservative, Yellowhead, AB]

Going a step further, how would you suggest that the government streamline some of the documents that Canadians are seeing to show what is technically in each part and, overall, how that's going to affect the budget, the taxpayer, and how much they're paying? What can we do to streamline it so that we can understand what they're presenting to us?

[William Robson]

The fact that we have a headline debt servicing cost figure that's a bit disconnected from the bottom line and the net federal debt figure that we're all familiar with is a problem. It would make sense for that to be a great deal more simplified, so that people can make sure that we're comparing the right debt servicing cost to the right debt number.

As I said, what's been driving the divergence between them is that the government is doing so much through its balance sheet. There are expenses that never show up in the budget because they are loans, investments and advances, as they're called, and that is showing up in financial assets.

Parliamentarians do need to pay a lot of attention to what is in those financial assets, because if it turns out that they're not good investments, one day they may be written down, and then we would discover after the fact that those were things that ought to have been shown as budgetary expenses rather than loans.

[William Stevenson, Conservative, Yellowhead, AB]

I have one quick question to end with. We've been talking about Bill C-40 and moving military spending to an agency. Can you talk about how, basically, from our side of it, we see that moving everything into an agency is really diverting or misrepresenting the full picture?

[William Robson]

I won't comment on that specific instance, but we do need to pay attention to the things that the government is doing through its financial assets, because some of those things might more appropriately be shown as spending.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

Ms. Tesser Derksen, you have six minutes.

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

Thank you, Madam Chair.

Thank you to our guests. Welcome.

You may know that this committee, public accounts, is meant to be a non-partisan committee, much like your institute, and we're always seeking to ensure that taxpayer value for dollar spent is a top priority. We do that often with the assistance of the Auditor General and witnesses like yourself, so thanks for being here.

I want to step back and take a look at the global landscape. There's been a great deal of global interest in Canada and in our strategy in pushing back against the United States and these unjustified tariffs that have been causing so much uncertainty for Canadian families and businesses. There's been a lot of buzz.

I'm going to read one quote. This is from the head of the International Monetary Fund, Kristalina Georgieva, who said:

[O]ne of these actions is...to reform—modernize the budget framework by doing two things. First, separate operating expenses in the budget from investment—[this allows them] to then focus strategically on investment that [is] progrowth, that can lift up productivity. And then send a signal to companies and to society as a whole that Canada is [focused on growth], we welcome [this] very much.

There's a lot of optimism about the fiscal strategy that the government's engaging in, and I know that your response—I did go back into some media releases and things—might be a little less glowing.

I appreciated the compliments at the beginning, but they were much shorter than the complaints. That being said, it's important that we take all perspectives into consideration so we get the best result for Canadians.

I want to give you an opportunity to respond and maybe provide a bit of a foil for the quote I just read, or perhaps you see some alignments with your research findings in what the IMF head said.

[William Robson]

The federal government deserves credit, since you mentioned the compliments, for having led the way to an integrated system of financial reporting that we now almost take for granted: the public accounts, the public sector accounting standards that exist and that the federal government adheres to along with the provinces and territories. It's a big step forward. Many other countries would love to have a framework that's as consistent as that.

One of the key elements of that framework is that it treats capital as something that you invest in, and it shows up as an asset on the balance sheet. Then, as it gets used up, you record the expense—its depreciation or amortization—and over time, as it gets used up completely, you run it down to zero, and all of that shows in the regular budget and the public accounts.

As assets get used up, they're shown as expenses. When they are first put in place, they do not show as expenses any more than a household would record buying a house as an expense. It's a very good framework. That's what the public accounts do and that's the main framework for accounting in the budget.

I have never thought that it made sense to have a separate capital framework, because then you're splitting the budget. It's like the bad old days and what many cities still do. You really want to have your operating and your capital budgets integrated, and that's what the federal public accounts do already.

We have a great framework. I don't think it adds a lot to start to count capital in a separate category, because it's all there in the public accounts. It's a very good system for keeping track of how all your physical assets are and what needs running down.

With the federal government investing so much more in capital assets, including in defence over the next little while, I think we should pay attention to that overall bottom line rather than starting to separate the budget and have more than one bottom line.

[Nicholas Dahir]

I'd like to take the opportunity, because your question, I think, points to something that we focus on, and that is the capacity to deliver services. The PSAS framework and treatment of capital accounting that Bill laid out ensures that the accumulated deficit.... That is, over years, some of the surpluses and deficits reflect the city's capacity to deliver services, and this is what we strongly encourage the governments to make clear to anyone who can read and write and add.

The federal government in particular, along with all governments, looms large in our lives, and it has a very significant effect on where people choose to work, live and invest, so we strongly encourage the governments to adhere to PSAS and the accrual accounting, because it straightforwardly tells you the capacity to deliver services, which is ultimately what investors and consumers will be interested in.

[Kristina Tesser Derksen, Liberal, Milton East—Halton Hills South, ON]

Thank you for that.

You've touched on a couple of themes that I lived through in my previous life as a municipal councillor. In fact, we did have our budget split into operating and capital, and the capacity to deliver services at the municipal level was something that we were always struggling with, so I appreciate your bringing up those points.

We have talked about debt and spending. Given that there is this ambitious strategic direction that the government's taking to transform the economy and build in some shock resistance, there's some unavoidability of spending large amounts in investment and spending over a long time horizon. I already noted the response from the IMF person, and there are accolades from other G7 countries that I haven't read.

How would you compare the current government's response to the new global economic landscape to that of other G7 nations?

[William Robson]

Canada is in a very enviable position, as you know, when it comes to its overall fiscal position. That stands out on a world basis.

It's also very good to have the capacity, as we do, for the federal government to make some big capital investments. When I say capital investments, I mean investments in actual infrastructure—things that help us trade, for example, such as ports and airports and other national infrastructure—that are appropriate for the federal government to do.

All of those things are very helpful. It's nice that we are getting recognition for our relatively good fiscal framework. The thing that we need to watch for, going back to a comment that I made earlier, is that the investments really do have to pay off, but not necessarily in a financial sense; they have to make sense for the country. A lot of us would agree that the defence spending is necessary, and the infrastructure that will allow us to trade more with trading partners that we currently would like to do more business with.... All of that is good.

In general, when the federal government invests in—

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

Mr. Blanchette‑Joncas, you have the floor for six minutes.

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

Thank you.

My first question is for you, Mr. Dahir.

In your 2025 report card, you give Quebec a B+ and the federal government a D for the quality of financial information.

In concrete terms, what is easier for elected officials or constituents to check in Quebec's financial documents as opposed to Ottawa's?

[Nicholas Dahir]

That's a very good question.

We take this approach in our grading from the position of somebody who is not an expert but can read, write and add, and is interested. The criteria we employ in our scorecard, our judgment, are the things that enable a person like that to answer straightforward questions. How much more is the revenue expense than it was last year? How much is it projected to increase? These questions are easier to answer for Quebec, for example, because they don't admit any items from their consolidated expenses like the federal government does.

Another thing about Quebec is that its financial statements have very consistent budget comparisons in the public accounts. You can take a look at the results, you can take a look at the projections that are alongside them, and you can compare those to the actual budget document, and everything lines up. With the federal government, there are far more interruptions and frictions if somebody wants to perform that exercise.

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

Mr. Dahir, would you say—

[William Robson]

Quebec [Inaudible—Editor], I would add—

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

Yes, go ahead.

[William Robson]

I'm sorry to cut in.

I wanted to say, because I had mentioned the timing of the public accounts, that Quebec produces its numbers faster. Quebec has also been quite good on budget delivery, although not in the latest report card. That's one of the reasons it didn't get an A.