To follow up what you said, I want to give my thanks and appreciation.
Colleagues will remember that in the beginning, we were dealing with the previous government's audits. We were doing great stuff, but it's a lot easier to do that when it's the former government.
I said to the government members at the time that the day would come when it would not be easy for us to do the right thing as the public accounts committee and to be non-partisan and only look at the issue of government spending and efficiencies and waste, etc. They were going to get a lot of pressure from their government not to give anyone a wedge.
What happens is—and you know it ahead of time—that the issue of voting unanimously on something that's in any way critical or not supportive of the government becomes weaponized in question period, and the parliamentarians know that. The job here is difficult. It's one that's different from any other committee, and we have to be non-partisan. When we're partisan instead of non-partisan, Canadians aren't getting the oversight that we are mandated to provide.
I want to give a special shout-out and thanks and appreciation and respect to the government members who, in spite of the politics outside this room, grew to the full parliamentary responsibility of this committee. They were fully prepared, and weeks before an election set aside their partisan membership and said that in the interests of Parliament and the work of the Auditor General and this committee, they thought this was the right thing to do and that they would deal with the politics outside. That's exactly what they did, and I have the greatest respect and admiration for them.
Anyone who wants to use that as a clip or to give their material some oomph, you're welcome to it—
Some hon. members: Oh, oh!
Mr. David Christopherson:—because the government members, in particular, on this issue of the underfunding of the Auditor General rose to the occasion and deserve the respect of all of Parliament for doing the job that's expected of them, in spite of the fact that, politically, it was going to cause them a problem.
Thank you, Chair.
Mr. Chair, thank you for inviting us to discuss the Office of the Auditor General of Canada's current funding situation. This discussion is necessary to ensure that our office is able to deliver on its mandate. With me today are Andrew Hayes, deputy auditor general, and Casey Thomas, assistant auditor general responsible for performance audits.
I'm going to provide a recap of the office's funding and the pressures that have developed. Then I will speak to some challenges presented by the current funding mechanism.
The office has faced funding pressures in recent years. This has impacted our ability to deliver on our mandate, to keep up with the complexity of the audit environment, and to ensure that we have the people, support services and systems we need to fulfill our responsibilities.
Our need for additional funding was first raised by former auditor general Michael Ferguson in the office's 2016-17 report on plans and priorities, in quarterly financial reports since then, and, more formally, in July 2017 correspondence with the . At that time, we had not requested or received a budget increase in about 10 years.
In 2011, the government undertook a broad budget reduction exercise. Though our office, as an independent agent of Parliament, was under no obligation to make any cuts, we were strongly encouraged by the to endorse the reduction exercise.
We voluntarily participated. Some audit mandates were stopped, and investments in technology and knowledge building were reduced or postponed. Through these measures, we were able to reduce our workforce by about 10% and our funding by 8%. As a result, we returned $6.7 million in 2014-15 from our vote 1.
[Translation]
Up to Budget 2018, our funding remained largely unchanged, except for receiving $3.2 million for yearly economic increases, consistent with the rest of government. It is important for you to know that we have been and will continue to be forced to use about $1.5 million every year from our vote 1 to cover unfunded salary increases from 2014-2015 and 2015-2016, and also to cover additional measures that we have had to put in place as a result of the Phoenix pay system, so that we could pay our employees.
We managed within our allocated budget for a few years, but by 2017, our budget was no longer sufficient to allow us to keep up with the complexity of the audit environment, the size of our mandate and our operating context.
The former auditor general then asked for a permanent increase of $21.5 million to our vote 1, to be phased in over two years: $9 million starting in 2018-2019, and $12.5 million starting in 2019-2020. This increase was intended to allow us only to maintain the current number of audits that we did, not to increase them. Since that request, we have received additional unfunded mandates.
In Budget 2018, we were allocated $8.3 milllion, which included $1.3 million for accommodations and contributions to employee benefit programs. This means that the permanent increase voted by parliamentarians and available for our operations was $7 million, which was a third of the total increase that we needed.
In July 2018, Mr. Ferguson wrote to the again to request $10.8 million in additional funding, which represented $3.7 million less than his original request for $21.5 million. The Minister of Finance acknowledged the thorough analysis conducted by our office. However, in Budget 2019, we received no additional funding.
Many audits we conduct are required by legislation, including special examinations of Crown corporations, most financial audits, and some work conducted by the Commissioner of the Environment and Sustainable Development. We continue to receive additional mandates with no related funding, or any discussion of the cost of this work for our office.
There is also the fact that the government's program expenses have increase by almost $75 billion over a five-year period ending in 2019-2020, and they are expected to increase by some $40 billion over the coming four years. Because these increases are reflected in the government financial statements, they mean an increase in our mandated workload.
[English]
In parallel, the auditing environment has become increasingly complex. This is due to many factors, including the transformation of the government pay system, new infrastructure arrangements that include different public-private partnership arrangements, and additional complex transactions such as pension investments made by the public sector pension plans.
Auditors must adjust to the increasing complexity of the audit environment. They need access to and must continue to build their expertise in areas such as IT system control environments and data analytics. It's equally important to stay current with accounting and auditing standards and to have access to technical professional development. Without additional funding, we struggle to provide our staff with this expertise.
In performance auditing, we have seen an erosion of our capacity to gather and maintain the knowledge and expertise of the complex government programs we audit. We must be able to assign staff to develop this knowledge before audits begin, so that we have all of the information we need to select the best audits and are ready when it's time to start our audit work.
Our inability to invest in new technologies or audit approaches that are necessary to prepare the office for the present and future remains a serious concern. For example, some of our IT systems will no longer be supported, starting in 2019-20. At our current level of funding, we are unable to replace them before 2021-22 at the earliest. We also estimate that our IT security risk will not be reduced to an acceptable level until at least 2021.
Industry experts have expressed the view that we are significantly behind them in the development and use of IT-enabled audit approaches. We do not have the funding to modernize our approaches and train our staff to keep pace with the industry.
Because most of our financial audits and other work is not discretionary, if our funding remains inadequate, we will be forced to readjust priorities to meet our statutory responsibilities, and to comply with government policies and meet our own organizational requirements, such as replacing IT systems. This means that parliamentarians will receive fewer performance audit reports they can use to hold government organizations to account for the results they deliver for Canadians.
Ten years ago, we were completing about 27 performance audits every year. In 2019, we will complete 16 performance audits. Going forward with our current level of funding, we expect to deliver 14 performance audits each year. This will include three audits for territorial legislatures, four audits presented by the commissioner of the environment and sustainable development and seven audits from the Auditor General.
[Translation]
Before closing, I would like to turn to what Michael Ferguson, our former auditor general, considered to be the largest issue underpinning our funding pressures: the process by which our office, like other agents of Parliament, receives its funding.
The fact that government departments that we audit are involved in determining how much money is allocated to us is not consistent with our independence or our accountability only to Parliament. To give you an example, in the audits we released in early May, we reported on the activities of the Department of Finance and the Treasury Board Secretariat, both of which are involved in supporting government decisions about our funding. That just does not make sense.
We would note that, in his November 2015 mandate letter, the tasked the Leader of the Government in the House of Commons with ensuring—and I quote—“that agents of Parliament are properly funded and accountable only to Parliament, not the government of the day, in collaboration with the President of the Treasury Board.”
In a January 2019 letter addressed to the Clerk of the Privy Council Office, six agents of Parliament, including former Auditor General Michael Ferguson, stated their desire for an alternative funding mechanism, independent of the executive arm of government.
They further detailed the need for an automatic annual budget adjustment based on a factor directly linked or pertinent to the mandate in functions of each agent of Parliament. One option could be to link our budget to the government's total program expenses. In July 2018, Mr. Ferguson wrote to the to propose such a mechanism.
The process required to release funds is also challenging, not only for our office, but for government as a whole. For example, the $7-million increase to our vote 1 in Budget 2018 was not received by our office until October, after a laborious process of application to the Treasury Board Secretariat. This delay prevented us from using all the funding because of the time required to hire staff and put in place contracts.
[English]
In conclusion, Mr. Chair, I thank this committee for the opportunity to present the recent history of our office's budget and the challenges we face as a result.
We would be pleased to answer any questions that you may have.
Thank you for the opportunity to be here today. I hope I can be of some assistance in addressing questions with respect to the committee's study of vote 1 funding for the Office of the Auditor General.
As you noted, the deputy minister could not be here today due to a scheduling conflict.
I would begin by clarifying that while the Auditor General is an officer of Parliament, his office is part of the executive branch. It is listed in Schedule I.1 of the Financial Administration Act and, therefore, falls within the definition of a department in that act, as do the Offices of the Information and Privacy Commissioners, the Commissioner of Lobbying, the Commissioner of Official Languages, and the director of public prosecutions.
While all of these officers are functionally independent of government, their offices are treated as government departments. As such, they are governed by the same funding framework as other government departments and agencies.
That framework requires that a funding request be submitted to the Minister of , typically in the context of the annual budget process. Requests for new funding must be supported by a business case.
The staff of the Department of Finance analyze incoming funding requests and their supporting business cases. Advice is then provided to the Minister of based on the department's analysis, which, in turn, informs the decision. If a decision is taken to provide additional funding, the department or agency is appropriated approved funding through the estimates process and appropriation bills.
The advice provided to the Minister of on specific funding requests and the rationale for decisions taken are confidences of the Queen's Privy Council. I have no authority to disclose them, as I trust the committee will understand.
However, I can shed some light on the analytical process undertaken by the Department of Finance.
The department assesses funding requests from two main perspectives.
The first is from a vertical organizational perspective. Through this lens, the department examines the resource needs and business priorities of the organization; the detailed elements of the funding proposal and the strength of the supporting business case; and benchmarks and other metrics to help understand and evaluate the proposal's merits. At the same time, the department considers the organization's ability to reallocate and absorb cost pressures within its existing funding levels and to implement a significant increase in its resource base.
The second is from a horizontal, all-of-government perspective. Through this lens, the department assesses an organization's request against other competing priorities across government. In this context, the request is competing for limited new resources against other social and economic priorities.
In his initial request, the Auditor General asked for a 31% increase in the operating base for his office, a significant increase from the two perspectives outlined above. Recognizing the importance of the work of the OAG, through budget 2018, the office received a 16% increase in funding relative to the 2015-16 fiscal year.
In July 2018, the Auditor General submitted another funding request in the context of budget 2019. The committee has been provided with a copy of this request, which was supported by the same business case as the previous year's request.
The government remains committed to working with the Office of the Auditor General to ensure that the office is able to continue to provide Parliament with objective information and sound advice with respect to the performance of government programs and activities.
Also, under the Auditor General Act, the Auditor General is able to make a special report to the House of Commons in the event that the amounts provided for his office in the estimates submitted to Parliament are, in his opinion, inadequate to fulfill his responsibilities.
Finally, I would note that previous parliamentary committee studies and pilots have been undertaken since 2005 to propose and test new processes for the budget-determination mechanism for officers of Parliament. Their purpose was to ensure the independence of the officers of Parliament from the executive while providing the appropriate measure of accountability for their spending and performances.
Thanks for the opportunity to be here today.
:
—in light of the fact that others aren't, but here you are facing the fire. But also, I thank you for your tone, your approach and your acknowledgement of the legitimacy, at least, of the issue here. I appreciate the way you're defending the job you did, and I compliment you. This could have gone sideways really quickly. I think you've done an excellent job, and I want to personally commend you. I hope you continue to provide the kind of contribution that you do.
Chair, I think the Auditor General has outlined the case as well as can be expected. What I'd like to do in my first round is just provide some context, and I'll reserve my right to shore up any arguments later, if that should be necessary. I'd like to put this in context.
Let's understand that in the world of democracies, and particularly accountability, Canada is a world leader. We fight for that in as many categories as we can. Given our size, we don't normally make number one or two in too many things; we're usually in the top six or 10 on things that matter. But I have to tell you, in terms of auditing and our Auditor General process and the work of the public accounts committee, we are world renowned. Particularly, this committee, in this Parliament, stands out so much. Again, I compliment the government members. It's a much more difficult decision for them than for us in opposition, yet you rose to the occasion. I can't praise and respect you enough for doing that, because without that, we're nowhere. Thank you.
Conversely, something like this jars the international community when they go, “Wait a minute. I'm hearing something about the Liberals. Trudeau, in Canada, is not giving the Auditor General the money they need. What's this all about?” It'll have an effect—a negative one. It breaks my heart. We're down to the last couple of meetings. I leave here so proud of the work we've done, yet here's this great big stain on the work of the public accounts committee.
Mr. Leswick went out of his way to point out the processes involved. Again, I have great respect for what he said, and particularly how he said it. But understand, that's the problem. It shouldn't be looked at the way every other department is. Right now part of the argument being put forward by the government is that they didn't treat the Auditor General any differently from other departments. Well, that's a red light; there's a problem and a flag on the field. It isn't other departments, regardless of how we structured it. Keep in mind, this was recognized by the government and personally by the Prime Minister, who gave a mandate to his House leader to stop this way of funding it because this is how you end up in crisis—exactly this.
Had the House leader done her job and put that mechanism in place, we wouldn't be here. In fact, I would be complimenting the government on making a significant advancement in protecting the independence of Parliament's officers. Let's remember, these are not just any bureaucrats. They answer to Parliament. Parliament hires the Auditor General. Parliament fires the Auditor General—not the government. Yet it's the government process that decides funding.
To get into a little bit of the politics of this, I am, very much like my friend, Mr. Davidson, at a complete loss— and have been from the beginning—as to why the heck this is happening at all, given that it's never happened before. I can come up with only three potential motivating reasons, and I haven't heard a single one from the government. I don't mean the government members here; I mean the government in the House of Commons. You've done your job, and now it's for us to put the pressure on the government through the House. That's how this works.
If the Auditor General had a process, an independent way of getting its funding, I wouldn't need to raise this. But we don't, even though they were supposed to do it.
First, it was specifically to avoid the cybersecurity issue. The political calculation is that it's better to take the hit now for underfunding the Auditor General, especially when nobody in the media's paying any attention—except Andrew Coyne and Postmedia. I give them full marks.
I wish it were somebody else driving this than I, because for us it often looks like we're trying to generate a headline. I'm trying to do the opposite: to fade away and disappear. This is not the way I wanted things to be. But I have to tell you, I just wish the national media would pay a little more attention to this. With the greatest of respect, this bloody well matters.
Anyway, was the political calculation to avoid the cybersecurity issue because it would be so devastating? I was here for the first cybersecurity audit and it was devastating. It shook me to the core. Is that why they're underfunding the office? Is it to make sure that that particular audit doesn't come forward because they're arrogant enough to believe they're going to get re-elected and they know the damage this might do to them in the second mandate? That's one possibility. Is another—and with the greatest of respect, I don't you mean you personally, Mr. Leswick—that it is retaliation and revenge on the part of the bureaucracy who ended up having a rather negative audit?
The Auditor General audited the very people who help decide whether or not they get full funding. So was it revenge or retaliation? I want to say that I find it hard to believe it's either one of those two, particularly given that I know the individual members of this government. I find that really hard to believe.
But I'm at a loss. The last one seems to me to be the most likely, and it's also the one that we can fix the quickest. It looks to me like there was a mistake, that this slipped through and now they've doubled down because they don't want the embarrassment of having to change their mind. If anyone can offer me any motivation beyond that, I'm willing to listen, because I really can't think of any other reason why the government would do this except for those three reasons.
Thanks, Chair.
I just want to very quickly come back to your point. The question I think Mr. Richards was asking earlier is the taxpayer side. As we've conducted our studies on the call centres, we find out that the taxpayers are very concerned about the fact of what is viewed by some as poor service through our call centres. That obviously was one that we felt, even as a committee, was in the committee's interests. We wanted to study it. The second one that they chose to do was on asylum seekers—a very timely study. I commend the auditors for their choices in audits, because I think that's where the taxpayers really are.
The third one after call centres and asylum seekers was RCMP security—again, a very vital one given some of the attacks we've had where there have been deaths, so I thank the auditors.
I think I speak for our committee. We absolutely believe that you must remain independent, where you decide what those audits are to be. I think maybe from the perspective that we come from, as a committee, dealing also with public safety and national security—I've served as chair of that committee—we also know right from that committee that cybersecurity is maybe not the conversation amongst the average taxpayers, but I think all committee members on all sides understand. I think even when you pick up a paper or any type of media, you'll see that cybersecurity is an issue that we face today that we haven't thought about in the last 20 to 30 years. It is a massive concern.
I don't want our committee to get too far off here. It's not one government or a different government. This is the mechanism on how best to fund parliamentary officers, or what Mr. Leswick calls departments, like the Office of the Auditor General. This is what I think we need to consider a little more here.
Where are we, Madame Clerk?
We'll go back to Mr. Davidson, please.
First of all, I just want to mention to Mr. Whalen who used a sort of common-sense approach—and I appreciate that—in the comments to say, hey, maybe politicians should decide what gets studied. I appreciate where that's coming from, but I can assure you that one of the golden rules of public accounts is the independence of the Office of the Auditor General to choose what it goes into. Otherwise we're into a whole other nightmare scenario in which it is being guided by politics. That independence is crucial, and I think that's what the chair was emphasizing, but I understand where you're coming from. I just needed to make that point. That's a golden rule with us: we can recommend, and when it's unanimous that office pays serious attention to it, but, at the end of the day the law says the office is independent and decides where to go, not us.
I had, I think, actually criticized the media—which is really stupid if you're running again, but I'm not. However, when I am trying to get something, doing that is just as stupid, and I don't want to do that. I'm imploring—that is more the tone I should have taken—the national media to please help us and pay attention to this. We need the public to focus on Parliament's plight here.
I want to give a shout-out. I mentioned Andrew Coyne, and he was good enough to tweet it, but Marie-Danielle Smith was the one at Postmedia who did a story immediately afterwards and then a follow-up one. I could have lived without the hook that created the story, but it got the story out there. That's what matters, and it's much appreciated.
I can tell you that within the auditing, accountability, oversight and transparency of government community, it was noted and appreciated. So, hopefully, we can get others to understand the importance of this.
:
I appreciate that very much, Chair.
I was talking about justification. The only justification we're getting in the House of Commons is from the government minister, who is standing up and going back to 2011 and condemning the Conservatives and using that as justification for what they did. First, even if it were true, it's not justification to underfund the Auditor General. Secondly, it's not true. We've got it in writing; we've heard it from our Auditor General. It was voluntary. I can tell you that it was my friend who was the president of Treasury Board. I know that he was actively working the phones and talking to the Auditor General's office because he knew that if they said no, they would have a bit of a problem. He was showing respect and doing what he could to avoid that.
That is not what the government is saying that the previous government did. I don't belong to either party and I was here for both Parliaments. It is absolutely unfair and unjustifiable that the government would make up stories about the previous government to create a phony fig leaf to hide behind.
Next, I want to point out again that while we have a majority government, we often lose track of the fact that Parliament is supreme—not the government. Parliament decides who is the government. Parliament decides who is the Prime Minister by a majority vote. Whoever can get 50% plus one in the House of Commons is the Prime Minister, but at the end of the day, the executive council—the Cabinet—has no legal right to spend one penny that Parliament hasn't approved. Parliament controls the purse strings, but because we have a majority government and the government wins every vote and when they put the budget forward it carries, it looks like the finance minister is calling the shots. At then end of the day, though, structurally.... You really see this play out when you're in a minority government. You and I have been there, Chair.
The reality is that here we are going, cap in hand, to a subordinate body to ask them to match the funding that we recommend and yet we control the purse strings. That's the absurdity of where we are.
I also want to point out the following, because it just jumped in my head, and I thought it was a good point. We asked the question—I think it was Mr. Arseneault who asked the really good question—whether there are any other jurisdictions that do that. Nine times out of ten, Mr. Arseneault, when other jurisdictions around the world ask that question of their auditor general, guess who gets held up as one of the one or two best in the world? The answer you heard was New Zealand and the U.K., because when you remove us from the equation.... We like to fight with the U.K. about whether we're one or two. It's a lovely fight to have, but I just want to point out to you that that's the respect we have in the world and that's what's at stake, too. Internationally, this government had a mandate to reposition Canada on the international stage and here you are damaging our reputation in an area where we already are seen as world leaders. I just wanted to put that on the record.
With the greatest of respect, if the government would change its mind and acknowledge and say that it was going to respect the agents of Parliament and it said it was going to respect the standing committees of Parliament and now the agent of Parliament and a standing committee by unanimous vote have called for this $10.8 million to be put back in. As much as it was question period yesterday and I was full of rhetoric and everything else, I do beg the question: Where is the respect?
I have one absolute last point I want to make and then I will be completely finished on this subject.
:
I do have one other question and a couple of comments.
Mr. Leswick, thank you for being here today. You've been in that department for many years, I guess. I recall that when I was minister in that department you were there, and we appreciate your being here today.
You and I and most people understand the budget consultation process and the budget. Thank you for your comments bringing us around to how this works. Thank you for explaining to us that the Auditor General's office supplied a business case, as it also did in 2011, as to exactly how this money would be spent. As you know, in 2011 we were in a global recession and all departments were asked to take a look at their spending and their budgets, as there was a deficit reduction action plan in place then.
We found out today from Mr. Arseneault's question that the Auditor General's office is included as one of those departments. I was not fully aware of that. I thought there was something different there with the Auditor General's office. Perhaps that's one area. The reason I say this is that I do know that as they make their budget requests, there's also some back and forth. At that time, it was Minister Flaherty going back and forth with the Auditor General as to whether or not you could indeed continue with these audits. There was the assurance that they could indeed. We have the letter. We knew that at that time Mr. Ferguson and the Auditor General's office said that they wanted to be team players, that all of the departments were doing this, and that they could do this without cutting audits.
Also, Mr. Christopherson brought up today the fact that the Treasury Board president, Mr. Clement, wrote a letter to the Auditor General saying that before this went through, he wanted to know whether there was going to be a reduction in the plan. He was given an assurance that there wasn't.
Mr. Ricard, did you receive that type of a letter from the Treasury Board president in the last budget?