Mr. Speaker, I thank the member for Cariboo--Chilcotin for bringing this matter to the floor of the House of Commons this morning. I do not think he mentioned the fact that there is no need for divisiveness across the way. The government has been very supportive and has taken the initiative to implement the financial information strategy.
The member gave us a rough outline of the difference between accrual accounting and cash basis accounting. I am sure for all those who are watching today, it must be a big yawn when accountants get together.
I would like to briefly explain this, more or less building on what the member has stated. The government's accounting system is basically a cash basis of accounting. We record when the money comes in and when the money goes out. It is as simple as that. That is how most people's personal income tax returns are filed. It is based on income that they receive during a year and expenditures that they pay during the year is called a cash basis of accounting.
A lot of our farm community are still allowed to be on a cash basis of accounting. In my days as an accountant for many farmers it was always amazing to me that they had fields full of cattle but never had recorded these as inventory. They showed them as an expense when they bought them. We can see how it is sort of an absurd accounting system but it is a very simplistic one to use.
This is the one the government has used for countless years and most other countries in the world have started initially with cash basis or fund basis accounting.
In the private sector, although it has been on an accrual system for a long time, that means that they record their inventories at the end of the year. General Motors will record its inventory of car parts and so forth at the end of the year as an asset, whereas the government may have bought a destroyer and has recorded it as an expense, like it is off the books. This is a big difference of opinion. Even within the private sector accrual accounting is treated differently even within some industries.
I can well remember different airlines having different depreciation methods for their aircraft. Some felt they had a better maintenance program and so forth and therefore their aircraft declined in value slower than did some that maybe did not spend enough money on maintenance. Even within the private sector thereare judgment calls as to what type of accrual methods to use.
When I first came to the House in 1993 there was a major concern about government deficits and the amount of debt this country had. With hindsight we have been able to deal with some of that. However, what is the government really worth? At the time the auditor general talked about the sustainability of Canada's debt. How long can governments continue building up huge debts and servicing them?
What is the House of Commons worth? If we look at the financial statements of the Government of Canada we will not see the assets of the House of Commons. Most of us would believe it must be worth something. The difficulty is how we apply a value to it. We could go back to its original cost, which was built after the fire of 1919, but that would not be a proper evaluation because that would be historic. We could go to replacement cost. What would it cost to replace it today? There are various methodologies of arriving at this. One of the major departments of government, the biggest issue is with defence. What is the value of a destroyer? The destroyer has a better value in wartime than it does in peacetime. If we do not maintain it properly, what is its real value today?
This has been an ongoing problem within government to find ways to value these assets. The concept of accrual accounting is not new but it certainly is new to government since governments have been very slow to react to this kind of accounting methodology.
Why do we want to implement it? It is because the people in control of the assets, the managerial class within government, have a responsibility to administer their portfolios effectively. We have all heard about the situation where come the end of March we need to spend a whole bunch of money to get money off the books because of the budget. People look at this as a ludicrous concept.
We want people to manage the resources they have effectively. It is not about spending money. It is about managing buildings, assets, people, human skills and so forth effectively. The motion would provide an impetus for better management of financial assets within government. We have been talking a lot about that recently. People want more accountability and transparency in government.
It is hoped this would lead to better management decisions. The hon. member touched on that. In other words, given the resources under one's command how does one measure the effectiveness with which one administers the assets? There should be a measurement tool.
The hon. member talked about outputs. That is where governments want to go today. Let us measure what we provide for citizens. Ultimately what governments do is transfer money from one set of taxpayers to another. These are all agreements we have among ourselves as people. As a people we want to know how programs are delivered, whether they are effective and whether they are efficiently provided. We need to do more than provide programs for the sake of providing them. We need a measurement tool to see if they are effectively achieving goals.
My minister, the President of the Treasury Board, has been forthcoming in providing a leadership role to ensure we find a way to measure this. In the area of health care, presumably we want to measure infant mortality. We want to measure all these things to be able to say our spending has a significant effect on the people to whom it is directed. Child care is another area. Are we improving the lives of younger citizens of the country?
As the hon. member has mentioned, the program was kicked off in 1995 by the former minister of finance. In March, 2000 the President of the Treasury Board issued a proposal called “Results for Canadians: A Management Framework for the Government of Canada”. In the document she set out a framework for management and an agenda for change designed around commitments to focus on citizens, sound public service values, the achievement of results for Canadians, and responsible spending. An important element of the agenda for change was the initiative to modernize comptrollership across the system.
Once again this gets back to how managers manage. We have had a lot of problems with this in government. Sometimes we do not like managers to manage because we are afraid they will make mistakes. This is where the opposition often makes headway in the headlines. When a manager makes a mistake, all of a sudden it is the direct responsibility of a minister and so forth. For this reason governments have been slow to allow the managerial class to manage these assets.
We need to change our thinking as a people and as a country. People make mistakes. We need to take a bit of risk to get good management. Managers should be responsible for decisions within their control. This is the way we are trying to evolve but it has been a slow process. There has been a culture of change in the federal civil service where things take a long time to evolve.
We need to develop standards and practices to integrate financial and non-financial performance information to properly assess and manage risk and to ensure appropriate control systems. We need to improve procurement, real property asset management and other financial management policies. The Financial Information Strategy was implemented in this context to enable modern comptrollership to happen. It provides the technical infrastructure, business-like accounting policies, modern financial system and trained staff necessary to support modern comptrollership.
We are not opposed to the hon. member's motion per se. We are opposed to the aspect that talks about the immediacy of change. The reality is that the change in process. It is happening. We must let the evolutionary process take its natural course, but we are pretty close to being there.