Madam Speaker, I am rising today to address Bill C-245, an act to amend the Financial Administration Act and the Auditor General Act, and in particular to give the Auditor General a mandate to review the reasonableness of estimates in the budget speech.
Whenever I rise to address seriously a question before the Chamber I always find I begin in a somewhat depressed state after listening to some of the earlier histrionics. Some of the positions that have been expressed so far today strike me as odd.
For example, the Bloc Quebecois would be concerned about giving the Auditor General the power to limit the independence and effectiveness of elected members of Parliament. Yet the Bloc Quebecois would not be concerned about the plans of the Government of Quebec to undertake action which would destroy Parliament and destroy the country. It seems to me to be a rather misplaced sense of concern.
Likewise some of the Liberal MPs who have spoken are similarly concerned about the control of the Auditor General. He may be controlling some of the decisions being undertaken on the financial end. They would seem to be unconcerned about the fact that our financial policies, if followed, will ultimately lead to the International Monetary Fund controlling the decisions we take here. It seems to me that should be a much greater concern when we examine some of these questions.
In recent years the estimates of revenue have been well off, as have many other estimates in the budget. That is the reason we are here today discussing some of these concerns. The political process left without any degree of fiscal discipline has failed us.
I compliment the hon. member for Fraser Valley West for bringing forward this kind of proposal. It is a very common kind of proposal, not just in political circles these days but indeed in academic and intellectual circles where the fiscal constitutions of parliaments and of governments are coming under some examination. I speak of public choice literature and various other matters.
Let us take a couple of examples of the kind of problem we have in budgeting in the House of Commons. We know that the last government, the Progressive Conservative government, of which none of us are particular admirers, really based its fiscal projections on revenue growth of 4.5 per cent per year basically for eternity or at least to the end of the century. We know and the Liberal government should well know that when it took office it had to deal with the extent of misrepresentation that had entailed and the kind of additional problems that created for its own plan.
In the last plan the government provided, as I have admitted before, much more modest revenue estimates. But the government largely adopted the interest rate assumptions of the previous government. In the last budget just months ago the government estimated that short term interest rates would be around 4.5 per cent for this year and about 6.4 per cent for this year on the long term side.
What is the fact? The fact is that the government is off 1 per cent on short term rates and about 2.5 per cent on long term rates. It finds itself now facing an additional unexpected crunch because those kinds of poor estimates on interest rates with a country that is so heavily in debt impact not only on the kind of deficits and financial planning we have this year but will impact dramatically in future years because of the compounding effect.
Therefore these are the kinds of suggestions governments should be looking at in my view in order to facilitate their work, both here in Parliament as governments with opposition and ultimately with the public and the financial community.
Government members who have spoken have suggested, as I mentioned earlier, their extreme and almost frantic concerns about the Auditor General taking control of their voice as elected officials. They seem unconcerned with the fact that the whips exercise almost unlimited power over their party, but they are concerned about the Auditor General. The strange thing about these concerns about the power of the Auditor General and the concern about opening up the entire subject matter is that this is not a concern at the moment shared by their own government.
As I understand it the government and the Department of Finance are actively studying this very issue, as well they should be. They should be acting of course but they are studying it. I believe and I hope that at some point they will come forward with recommendations to the House on the forecasting processes that have been used and how they might be changed.
They are not just looking at Nova Scotia. They are looking around the world. They are looking at what governments do in places like the Netherlands and Australia on these kinds of matters. The Auditor General is an appropriate individual to look at this sort of information, both at forecasts as well as at projections, as well as at various forecast scenarios that could be used.
It is an approach that is increasingly used in the private sector. There has been some reference that I have had opportunity to review of late to the various guidelines that securities commissions use and the Canadian Institute of Chartered Accountants use for evaluation of future oriented financial information.
This is not something that would be invented out of thin air or that the Auditor General is unfamiliar with. For example, when companies go into the securities markets it is often the practice that before they can issue debts their forecast will be reviewed according to acceptable standards. That would be expected in the investment market. Surely when we are talking about $40 billion deficits a year the taxpayers would expect the same kind of reasonable evaluations of our financial state to have taken place.
Let me just give some idea of some matters the CICA would consider relevant in the examination of future oriented financial information. It would examine all aspects of the procedures.
Public accountants would look at all aspects of the procedures used in formulating both forecasts and projections. They would look at the process of developing these forecasts and some of the assumptions and hypotheses that are behind them, as well as the preparation and presentation of financial forecast data and management representations that were received.
This gives some idea of some of the things they would evaluate whether, for instance, sufficient pertinent sources of information about the assumptions had been considered by management. These would include both external sources, what forecasting firms would say, what government documents say, what is available in various agreements, as well as internal sources.
They would look at whether the assumptions were consistent with the sources from which they were supposedly drawn, whether they are internally consistent and mathematically accurate, whether the historical, financial or other information used in the assumptions was sufficiently reliable for the purpose for which it was employed, whether other data are compatible over the periods of time for which they are being used, and whether the assumptions are consistent with the plans and policies of the entity. Probably, most important, public accountants would evaluate whether there is any bias in the selection of assumptions by management which causes the assumptions on an overall basis to be unduly optimistic or pessimistic. We know there has been a habitual tendency of government to be excessively optimistic, not simply in ways that are optimistic by very marginal standards of judgment but which are wildly optimistic and in fact indefensible by any reasonable standard.
Of course that is the kind of criteria the Auditor General would apply. The Auditor General would not second guess reasonable assumptions or pertinent assumptions, but he would second guess assumptions that were clearly and totally unjustifiable.
In terminating my speech, let me say I support the bill. I support the kind of matter it is looking into. I think if anything the subject could be broadened, but certainly the House should give its support to the bill. It should really consider seriously, as a matter of general policy, bringing this aspect and all aspects of government budgeting under established concepts of fiscal discipline that exist in all other walks of life.