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37th PARLIAMENT, 3rd SESSION

Standing Committee on Finance


EVIDENCE

CONTENTS

Monday, March 8, 2004




¹ 1535
V         The Chair (Mr. Roy Cullen (Etobicoke North, Lib.))
V         Mrs. Diane Ablonczy, M.P. (Calgary—Nose Hill, CPC)

¹ 1540
V         The Chair
V         Mr. Bernard Dussault (Former Chief Actuary of Canada, As Individual)

¹ 1545
V         The Chair
V         Mr. A. David Pelletier (Former President of the Canadian Institute of Actuaries, Individual Presentation)

¹ 1550

¹ 1555
V         The Chair
V         Mr. Monte Solberg (Medicine Hat, CPC) (Medicine Hat, CPC)

º 1600
V         Mrs. Diane Ablonczy
V         Mr. Monte Solberg

º 1605
V         Mr. Bernard Dussault
V         Mr. A. David Pelletier
V         The Chair
V         Mr. Odina Desrochers (Lotbinière—L'Érable, BQ)
V         Mrs. Diane Ablonczy
V         Mr. Odina Desrochers
V         Mr. Bernard Dussault
V         Mr. Odina Desrochers

º 1610
V         Mr. Bernard Dussault
V         Mr. Odina Desrochers
V         Mr. Bernard Dussault
V         Hon. John McKay (Scarborough East, Lib.)
V         The Chair
V         Mr. Odina Desrochers
V         Mr. Bernard Dussault
V         Mr. Odina Desrochers
V         The Chair
V         Mr. Alex Shepherd (Durham, Lib.)
V         Mr. Bernard Dussault
V         Mr. Alex Shepherd

º 1615
V         Mrs. Diane Ablonczy
V         Mr. Alex Shepherd
V         Mrs. Diane Ablonczy
V         Mr. A. David Pelletier
V         The Chair
V         Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

º 1620
V         Mrs. Diane Ablonczy
V         Ms. Judy Wasylycia-Leis
V         Mrs. Diane Ablonczy
V         Ms. Judy Wasylycia-Leis
V         Mrs. Diane Ablonczy
V         Ms. Judy Wasylycia-Leis
V         Mr. A. David Pelletier

º 1625
V         Mr. Bernard Dussault
V         The Chair
V         Mr. Rodger Cuzner (Bras d'Or—Cape Breton, Lib.)
V         Mrs. Diane Ablonczy
V         Mr. Rodger Cuzner
V         Mrs. Diane Ablonczy
V         Mr. Bernard Dussault

º 1630
V         Mr. A. David Pelletier
V         Mr. Rodger Cuzner
V         Mr. A. David Pelletier
V         Mr. Rodger Cuzner
V         The Chair
V         Mrs. Diane Ablonczy
V         The Chair
V         Ms. Judy Wasylycia-Leis
V         The Chair
V         Mrs. Diane Ablonczy
V         The Chair










CANADA

Standing Committee on Finance


NUMBER 005 
l
3rd SESSION 
l
37th PARLIAMENT 

EVIDENCE

Monday, March 8, 2004

[Recorded by Electronic Apparatus]

¹  +(1535)  

[English]

+

    The Chair (Mr. Roy Cullen (Etobicoke North, Lib.)): I bring this meeting to order.

    Pursuant to the order of reference of Monday, February 2, 2004, we will deal first with Bill C-421, an act respecting the establishment of the Office of the Chief Actuary of Canada and to amend other acts in consequence thereof. This is a private member's bill from Ms. Diane Ablonczy, MP for Calgary—Nose Hill.

    We have Ms. Ablonczy here, as well as Mr. David Pelletier, past president of the Canadian Institute of Actuaries, and Monsieur Bernard Dussault, former Chief Actuary of Canada.

    Ms. Ablonczy, I presume you will start off, followed by Mr. Dussault and then Mr. Pelletier.

    Commencez, s'il vous plaît.

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    Mrs. Diane Ablonczy, M.P. (Calgary—Nose Hill, CPC): Thank you very much, Mr. Chairman.

    I assume that all of you have a copy of my presentation to the committee.

    The purpose of the Chief Actuary Act is to provide for an independent Chief Actuary of Canada who will report directly to the House of Commons on activities of his or her office. That person will also be free to table special reports and to call Parliament's attention to anything he or she considers significant.

    The Chief Actuary of Canada has a responsibility, as I'm sure you all know, to give actuarial information concerning the performance of the Canada Pension Plan, the Canada Pension Plan investment fund, the Public Service Pension Fund, and the RCMP and Canadian Forces pension funds, and also, you will be interested to know, to look after the MP pension plan and the pension plan for judges. So Canadian workers and their families, public servants, those who have participated in defending our country, as well as members of Parliament and judges--all of us have an important interest in the implementation of independent oversight of Canada's public pension programs.

    This act would allow the chief actuary to also provide advice, opinion, analysis, or recommendations not only to a minister of the crown but also to provincial governments participating in any prescribed social insurance program or public pension plan established by Parliament, and also to any member of the Senate or House of Commons.

    Here is some background on the Chief Actuary Act. The Chief Actuary of Canada is currently under the jurisdiction of the superintendent of OSFI, the Office of the Superintendent of Financial Institutions of Canada, who in turn is under the jurisdiction of the finance minister. On August 25, 1998, Mr. Bernard Dussault, the Chief Actuary of Canada, was fired by the superintendent of OSFI just weeks before Mr. Dussault was to give a major report on the CPP. Mr. Dussault said publicly that he was fired because he was refusing to put an optimistic spin on the government's CPP projections. Mr. Dussault had been with OSFI since 1983, and was the Chief Actuary of Canada since 1992. On October 25, 2002, as a result of a court decision, Mr. Dussault was awarded a compensation package for wrongful dismissal.

    Here are the reasons I believe we should support this bill. First, Parliament would enhance the openness and transparency of government at a time when, I think we would all agree, confidence in these institutions is under question. By supporting this bill, I believe we as parliamentarians could reclaim a measure of public confidence. Parliament would enhance public trust in a key component of our social safety net in Canada, our public pensions.

    I'm sure you're aware of the recent Compas poll, published just last week, which found that 48% of Canadians surveyed are worried about the Canada Pension Plan, that it will not be there for them after they retire. So this is something very much on the minds of Canadians.

    The new actuarial review panel that was put into place to review the chief actuary's work following Mr. Dussault's dismissal explicitly supported greater independence for the Chief Actuary of Canada. They saw right at the time that greater independence was necessary. I've quoted here from their report, but I won't read it to you, if that's all right, Mr. Chairman. It's a little bit long. I believe the committee can just look at it for themselves.

    As recipients of the public trust, parliamentarians have a duty to protect, to the greatest extent possible, the important public pension interests of Canadians, including those individuals employed in a wide range of public service positions. It's our duty to make sure that we look after the pensions of Canadians. Passing this bill would demonstrate that Parliament is committed to openness and accountability in the operations of government.

    There is a growing public demand for an independent oversight of critical social programs on which Canadians depend. For example, the Canadian Institute of Actuaries recently called for an independent medical actuary of Canada. The bill before us today would increase confidence in the operation of effective checks and balances in the federal system.

    I listened carefully, Mr. Chairman, to the objections to the bill on second reading, and I would just make the following comments.

    First of all, to the argument that the chief actuary already has sufficient independence, questions around the wrongful dismissal of the former Chief Actuary of Canada certainly would clearly suggest otherwise. Changes to the operations of the chief actuary have been primarily administrative, and have not enhanced his or her independence. The chief actuary remains accountable to the finance minister, not to the House of Commons, and to the superintendent of OSFI rather than to Parliament.

    The CPP actuarial reports lack the independence and accountability found in the reports of the Auditor General. The government now seeks at least two pieces of professional advice for the CPP actuarial reports. The first is from the chief actuary and the second is from a paid panel of actuaries chosen by the government of the day to review the chief actuary's work.

    Further, other consultations from other experts may be sought, depending on the panel's response to the chief actuary's assessment. The reporting and advising relationship between the chief actuary and the government therefore lacks complete independence and accountability. Knowing in advance that his or her reports will be subject to a paid-for, private supervisory process, the person acting as chief actuary is placed under substantial constraint whenever controversial information would need to be released. I will refer the committee to Mr. Bernard Dussault's testimony before the committee today.

    To the argument that the bill would see the chief actuary drawn into matters of policy and into political controversy that potentially would undermine the confidence and professionalism of the office, by this logic we would shut down the independent operations of the Auditor General and of other officers who report directly to Parliament. This argument would also support having a chief actuary remain in the same position as the ethics counsellor, who also reports directly to the executive arm of government, and yet the new Prime Minister has promised that in future the ethics counsellor will be independent. The same rationale for that change would also support a move to an independent actuary.

    To the argument that an independent chief actuary would interfere with and slow federal-provincial cooperation on matters pertaining to the CPP, I would submit, with all due respect, that's simply nonsense. It's nonsense to suggest that independent and completely objective information on a critical social program would impede consensus-building. Worse, this objection suggests that consensus can only be reached if information about the program is other than independent and completely objective, and I'm certain that Parliament would not want to send such a message.

    In conclusion, Bill C-421, the Chief Actuary Act, received all-party support in the House of Commons on second reading. In terms of timing, as you know, timing is always a consideration in politics, and now would be an excellent opportunity for parliamentarians to demonstrate their commitment to solid measures that will increase openness and accountability in the operations of government.

    The operations of the Canada Pension Plan, the Public Service Pension Plan, and the pension plans of the RCMP, the armed forces, members of Parliament, and judges is of significant concern and interest to millions of Canadians and their families. I would submit that passing the Chief Actuary Act would increase the confidence of the citizens of our country in the institution of Parliament.

    Thank you, Mr. Chairman.

¹  +-(1540)  

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    The Chair: Thank you very much, Ms. Ablonczy, and congratulations to you for getting your bill to this stage. We all know what's involved in doing that.

    I think Monsieur Dussault is going to speak next.

    Commencez, s'il vous plaît.

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    Mr. Bernard Dussault (Former Chief Actuary of Canada, As Individual): Presently, the chief actuary reports administratively to the Superintendent of Financial Institutions, that's OSFI. On the other hand, as per the Public Pensions Reporting Act and the CPP Act, the statutory actuarial reports are signed by the chief actuary and transmitted directly to the Minister of Finance, for immediate tabling in the House of Commons. Those acts provide the chief actuary with a certain degree of independence in the preparation of the actuarial reports. Such degree is largely affected by the applicable administrative reporting rules, which seriously limit the chief actuary's autonomy and freedom that are required for the execution of his or her statutory actuarial duties.

    The soundness of and the public confidence in the governance of federal public affairs would materially decrease if the Auditor General did report to other than Parliament. The AG's reports rest on the accountability of a single, independent, and professional expert backed by a staff under his or her absolute and exclusive authority. The AG's reports are scrutinized by the Parliament, but not by any other private or public auditors under the auspices of the government. If the AG's reports were subject to such control, or if the AG would report to other than to Parliament, the AG's reports would no longer be the pieces of ultimate reliable advice to government, and have the impact that they are meant to have.

    The control process currently applying to the actuarial reports prepared by the chief actuary on the CPP is such that government receives two answers or pieces of professional advice on the financial soundness of the CPP. The first one is from the chief actuary, and the second one from the distinct panel of three actuaries appointed by OSFI to review the chief actuary's statutory reports. In fact, this process produces a multifold piece of CPP actuarial advice that may mislead the members of Parliament and the public by not providing the unique reliable CPP actuarial report required by the CPP Act for ensuring the sustained financial soundness of the CPP. Knowing in advance that his or her reports are subject to a private supervisory process requested by his immediate supervisor, the chief actuary may well act under too much public constraint whenever controversial information needs to be released, and may easily refrain from being as articulate as required by the actuarial profession.

    Bill C-421 appears to address very well the above-mentioned serious issues.

    Thank you.

¹  +-(1545)  

[Translation]

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    The Chair: Thank you very much, Mr. Dussault.

    Mr. Pelletier, you may begin.

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    Mr. A. David Pelletier (Former President of the Canadian Institute of Actuaries, Individual Presentation): Thank you very much, Mr. Chairman.

    My name is David Pelletier, and I am the outgoing President of the Canadian Institute of Actuaries. I am very happy to be here today. As I speak much better English than French and do not have much time, I will be speaking in English.

[English]

    I think you all have the material I'll be speaking to. We'll briefly cover what the Canadian Institute of Actuaries is. Occasionally I may lapse slightly and call it the “CIA”. Please don't confuse it with the other CIA. More importantly, we'll talk about the bill and why we support it.

    The institute was founded in 1965 by an act of Parliament. We are a self-regulating organization. We represent more than 2,500 fellows in Canada. We have the highest level of binding professional standards and we take them very seriously. There is a long, arduous education and qualification process to become an actuary.

    Occasionally things don't go as well as they should. We do have a discipline process to make sure that we do stay in line. Again, it's a very important part of our process to make sure that the standards we practise are at the highest level.

    A key point of our guiding principles, in fact right in the first sentence, is the fact that we hold the duty of the profession to the public above and beyond the needs of the profession and its members. Because of the very long-term nature of our work, the fact that any mistakes we make might not be discovered for 10 or 20 years out means that the standards we keep and the attention we give to the work are very important.

    What do we do? Essentially we evaluate financial implications of uncertain future events. Those events are things like death, disability, retirement, hiring, fire, earthquake, being sued, as well as the progression of future interest rates, investment returns, and that sort of thing. We combine that with probability statistics and finance to be able to provide a range of outcomes on what kinds of things the future portends. We call that actuarial science.

    Who do we do that for? We do it for insurance companies, pension plans, governments--in particular, the CPP and the other social programs of the federal government and some of the provincial governments--and other benefit plans. We also get involved in health care and in foreseeing the outcome of health care plans, not as much in Canada as we would like, but to a very great extent in the U.S. We also have a role in investment management and in actuarial evidence, marriage breakdown cases, illegal dismissals, and so on. So we do this sort of work for a lot of different kinds of employers, a lot of different kinds of clients.

    Turning now to the bill, in particular, you know it better than I, but I'll just touch on a couple of key points about why we think it's important.

    The role of the chief actuary as defined in the bill is to provide advice, opinion, analysis, and recommendation on any prescribed social insurance plan or public plan established by Parliament. We think this is very important, not being limited, perhaps, just to the Canada Pension Plan but also to other social insurance plans that are just as much in need as the Canada Pension Plan of understanding just where those plans are going, where the financing is going, and where the money is going to come from.

    What we also like about this is that it's not just the minister who can require this kind of information, but also any member of the Senate or House of Commons would have the right to consult and get advice from this particular position, the chief actuary. As well, any province participating in any of these plans would have the right to get information and analysis from the Office of the Chief Actuary, as well as from other members of the public, but for a fee. The priority is clearly not just the government but also there is a broader spectrum that concerns parties.

    The bill requires that the actuary, in doing all these reports on the office's work, also report clearly on whether he or she has been able to receive all the information and explanations that he or she has requested in doing his or her work. It's very important that he or she has full access to information, and this requires that he report on that to Parliament if there are any obstacles in the way.

    As well, the opportunity to make any special report, if there's a special need, a pressing, urgent need, which can arise, and again, not something that can be stalled from the outside.... As well, there is the fact that it provides for regulation to prescribe which social insurance programs or plans could be included for this purpose. I'll come back later to that. We think there's an important scope for expanding the range of plans in which the chief actuary and his expertise could be very usefully involved.

    So why do we support the bill? First of all, we believe it would enhance the public's confidence in the management by the government of promises made to Canadians, of the obligations flowing from those promises, and of the assets that are built up to support those obligations.

¹  +-(1550)  

    It's interesting. In a letter we put together last year to some of the members of Parliament, we said at the time—and where it says “CIA”, keep in mind it's our CIA—“Canadians place a very high priority on sound financial management in the public sector.” Now, we said that last year; frankly, recent events have brought this right to the top of the priority list for all Canadians and in fact for all political parties. We think this is a prime opportunity for the Government of Canada to show leadership in this area. That can really ensure that the actuarial analysis is and is seen to be free from any political and bureaucratic influence, a factor Mr. Dussault and Mrs. Ablonczy referred to, and then is based only on the highest professional standards we as a profession exercise. That's the first reason.

    A second reason is that there are some actuaries involved in other departments of the government. Employment insurance in particular, for example, is looked at by an actuary in a different area from that of the actuary dealing with the CPP. We think there'd be a lot of value in bringing those people together, combining the resources, pooling the expertise, and providing a single, very strong Office of the Chief Actuary. That would be for the benefit of everybody concerned.

    A third reason is that we think this could help attract actuaries of the highest quality into the chief actuary role and into the office. Why are we so concerned about getting actuaries of the highest quality? Well, the sensitivity of the results of the work we do to just small changes in assumptions is frankly astonishing. For example, as a consultant in my past life, I was appointed actuary for four different insurance companies. In one of those instances, in one company, if I had changed the rate of interest assumption by just 1%, it would have changed the total liability side of the balance sheet by 50%. So the sensitivity of the results of what we do to small changes in assumptions is just unbelievable. You want outstanding people involved in making those assumptions.

    Plan design is critical as well. It's important that as a plan is put together, there is clear understanding of the implications, analysis of the implications, and communication of the implications of the features of the plan design so parliamentarians, the policy-makers today, understand what the future implications are of the decisions they are making today.

    Finally, it's important that there be good management input into the management of the assets that are built up, those assets that are supporting those future obligations, and that we make sure that parliamentarians understand the range of outcomes that can result from these things and understand the implications of the decisions that are made.

    The fourth reason we support the bill is to get actuarial expertise applied where it is now most desperately needed, and we feel that's in the area of health care. The Canada Health Act specifically calls what it does as being a plan of insurance: not actually delivering health care, but rather being a plan of insurance. Any plan of insurance needs actuarial expertise. Right now in Canada there is none being applied to the whole problem we have in Canada with our medicare system. What we do have in Canada today in the area of health care, as you are all aware, are heated debates, lots of lineups, concerns about them, and more money being thrown at the system as it is today. But what we feel we need are more light and less heat in those debates, more accountability at all levels, and actuarial discipline in the mix that, along with the other professional disciplines, can help ensure a sustainable system.

    I won't read through the quotes I have here from both the Kirby and Romanow reports, which you have all seen, but the kinds of concerns they expressed could be very much helped by proper actuarial analysis of those systems.

    I did show here what we call population pyramids. You can see how the population of Canada is changing as you look at it by age. You see in 1986 essentially a pyramid with a lot of younger people and very few older people. As you see, by 2031 that's essentially expected to become a population square, where you have an awful lot more older people, and as you know, older people need a lot more medical attention. Where are the resources going to come from to provide the attention they need? How much analysis is being done today to make sure we have the resources available at the time to provide the service they will need?

¹  +-(1555)  

    What's interesting, as we turn to the next page, is that in the States, a country that, as you know, has a system of health care far more privately oriented than publicly funded, there is in the publicly funded system an Office of the Actuary. I won't read out here all of the things that actuary does, but you can see what's here. The kinds of things done by the office in the States is precisely what we feel is necessary to be done in Canada to ensure that we do have a proper handle on where health care in Canada is going and on what we need to do now to design it, fund it, and finance it properly. That way we can face the future with more confidence than we have today.

    Basically, we feel it's time now for much more light, less heat. The role of the chief actuary could be critical in looking at those issues.

    Again, our four reasons in support of the bill are that it will enhance public confidence, combine the existing roles of actuaries in different places into one office, attract actuaries of the highest quality into this key role for all Canadians, and potentially apply that expertise where it's most critically needed, which would be in the area of health care.

    In reading over the Hansard transcripts from May and September, at least two objections to the bill were raised. One, it was felt that the chief actuary would be drawn into matters of policy and potentially political controversy that might undermine the impartiality of the role. It's interesting that in the U.S., as I mentioned, this Office of the Actuary in the medical system has not been a problem. The U.S. actuary involved in the health care system does report to congressmen. He reports to the states--they can also ask for reports--he reports to committees, he produces reports for the committees of Congress, and he does work for the administration, but there has not been a problem in any way, shape, or form in terms of a lack of confidence in the impartiality of that office.

    Secondly, I'd say that the experience of the Office of the Auditor General of Canada demonstrates otherwise as well. The Auditor General has had a very interesting role lately, but frankly, her role, and the professionalism of that role, has not been impaired through all of this discussion. So I feel that objection is not a valid one.

    A second objection was that it might negatively affect federal-provincial relationships. As you know, the CPP is a plan that is essentially shared by the provinces with the federal government. But my feeling is exactly the reverse in that, frankly, as a Canadian, I've been appalled.... I've travelled across Canada as president of the CIA, meeting with governments in five different provinces and with people here in Ottawa, a combination of bureaucrats, civil servants, political staff, members of Parliament, members of legislatures, and cabinet ministers, and the degree of distrust is just amazing to me. I mean, sure I read about it in the papers, but I had no sense of how real it was until I heard it personally as I met these people across Canada. This was when we were trying to go across Canada to raise support for the idea of a medicare actuary. The biggest single stumbling point appeared to be the mixed jurisdictional issues between the provinces and the government.

    Frankly, we think this can only help. Having a position reporting directly to Parliament, directly to the people of Canada through Parliament, we think could be a very strong thing in favour of this position.

    So again, we feel this is an idea whose time has come, and we'd like to thank Mrs. Ablonczy for the initiative she has taken. We feel this is an opportunity for all parties to demonstrate to Canadians a resolve to enhance the confidence of Canadians in public financial management.

    Thanks very much.

+-

    The Chair: Thank you very much, Mr. Pelletier.

    Thank you to all three panellists.

    We'll go to a seven-minute round, beginning with Mr. Solberg.

+-

    Mr. Monte Solberg (Medicine Hat, CPC) (Medicine Hat, CPC): Thank you very much, Mr. Chairman, and thank you to our witnesses.

    In particular, of course, I want to thank Ms. Ablonczy. I just wanted to congratulate you, Diane, on your excellent bill and your presentation. It's outstanding. I think it is an example of the good work that can be done through private members' business. It's obviously not a partisan initiative, but something designed to advance the public good. We just need to see more of this.

    I also want to say hello and welcome to Mr. Dussault, who of course has had a history with the government. It's good that out of a bad situation something good can happen, and I think this is it. So it's great to see you here. I thank Mr. Pelletier as well for his excellent presentation.

    I think the issue here--and this is perhaps understandable--is the politicization of numbers. To what degree are numbers politicized? It's obvious that in a partisan environment this would tend to happen from time to time. So it seems obvious to me that the best remedy is to have an independent body that looks at these numbers and makes judgments based on actuarial science. For instance, if there is a scientific issue, maybe you need to have independent scientists make judgments about these things, because they do tend to become politicized. So I think, philosophically, this is a great idea. I have some questions, though, about some of the specifics.

    Would this change how the chief actuary is chosen? I'm not entirely certain how the actuary is chosen today. The Prime Minister has talked about making some appointments reviewable by the pertinent committee. Would this proposal affect at all how the chief actuary is chosen?

º  +-(1600)  

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    Mrs. Diane Ablonczy: Thank you very much for your question and for your congratulations. I want to be clear, though, that a number of my colleagues, from all parties in the House actually, have been of great assistance in bringing this bill forward, and of course, Mr. Dussault and the CIA; the actuaries of Canada have been very helpful too. So this is really a joint effort by a lot of people who really do want to see Parliament more open, more accountable, and more trustworthy and seen to be that. As to the politicization of numbers, we're hoping that doesn't happen, but we can increase the confidence that objective advice is being brought forward by passing this bill.

    With respect to your specific question about how the chief actuary would be chosen, this is not mentioned in the bill. The designation, of course, would still come from cabinet. If cabinet, I think increasingly, wants to consult with all members of the House on these kinds of important appointments, I'm sure that will happen. The important thing in the bill is not necessarily how this individual is chosen--the Auditor General, of course, is another cabinet appointment--but the degree of independence that is available to that individual. It's kind of like saying justice must not only be done, but must be seen to be done. In this case we need objectivity in the assessment of social programs, and it must also be clearly seen to be objective. So I think that's really important issue.

    I don't know if my friends have anything to add to that.

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    Mr. Monte Solberg: Let me follow up with regard to what difference this would make to the independence of the actuary. Perhaps Mr. Pelletier or Mr. Dussault can explain how it might be possible for the government, for instance, to influence the chief actuary under the system as it is today. Clearly, that's the concern. We want independence. We don't want the actuary to be subject to any kind of political influence. By making the chief actuary independent and having the chief actuary answer to Parliament, how would that change the relationship the actuary has with the government today?

º  +-(1605)  

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    Mr. Bernard Dussault: Just as a quick note, under the existing arrangement, the chief actuary is selected by OSFI. He reports administratively to the superintendent. The superintendent does not really have authority on the signature of the chief actuary. That puts the superintendent in a situation that's not desirable. It creates a lot of internal pressures that really affect the work of the chief actuary. Secondly, the fact that presently the chief actuary has to submit his reports to the finance minister does not provide as much freedom as would be the case if they were being submitted to Parliament. The third point, which has been raised by Ms. Ablonczy, is that the Superintendent of Financial Institutions, as the administrative supervisor of the chief actuary, also requires an independent report to be made on the work done by his own employees.

    All of these factors are impediments to the freedom of the actuary to work on a real professional basis.

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    Mr. A. David Pelletier: In your own professions you've probably seen this as well. We as actuaries are extremely professional, but who you're employed by or who your client is has some influence on the way you come at something. As Bernard Dussault was saying, whether your boss is the finance minister, OSFI, or whatever, there's some tendency to colour your judgment. To have you report directly to Parliament helps remove a little bit of that colouring, which is inevitable, even if done in a very professional way. it just helps to have it that much more clear.

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    The Chair: Thank you.

    Monsieur Desrochers.

[Translation]

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    Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you very much.

    Mr. Dussault, Ms. Ablonczy and Mr. Pelletier, welcome.

    Ms. Ablonczy I would like to ask you a few questions about Bill C-421. You refer to Mr. Dussault, who was fired, it appears, because he did not want to give the government what it wanted.

    Do you have other concrete examples of the federal government's interference in the work of the federal government's chief actuary?

[English]

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    Mrs. Diane Ablonczy: The one that comes to my mind is the concern that's often raised about the employment insurance fund. This of course is a different actuary. I know that a lot of unions, employers, and of course workers, people who pay into the fund, are concerned that more is required in EI payments than is actually needed to run the fund properly. That's one example of some controversy about numbers.

    I'm sure that Mr. Pelletier and Mr. Dussault can be helpful as well.

[Translation]

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    Mr. Odina Desrochers: Mr. Dussault, was this the first time you were subjected to pressure from your superiors concerning work-related statistics you submitted to them?

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    Mr. Bernard Dussault: After having dismissed me, the government sued me, alleging that I had made defamatory statements. I brought a countersuit for wrongful dismissal, but none of this made it before the courts. An out-of-court settlement was signed in April or May 2001, and the agreement stipulates that the only thing that can be said in this regard is that the agreement satisfied both parties. It can also be said that the agreement included some compensation, the amount of which cannot be divulged. Consequently, I am sorry but I cannot answer questions relating to my dismissal. I regret that.

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    Mr. Odina Desrochers: You say that there was an out-of-court settlement concerning your dismissal and your work. I was not asking a question about your dismissal. I asked whether you were subjected to other pressures from your superiors before your dismissal. You say that you came to an agreement with the other party as to the fact that you would not make any further comments on your work or on what transpired, etc.

    Do I understand you correctly?

º  +-(1610)  

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    Mr. Bernard Dussault: It was not that explicit, but last year I was approached by reporters because the amount of the compensation that was paid to me must have been published in the Public Accounts. So the sum was divulged. Reporters then started calling me. I said things that seemed very innocuous to me, and I received some very stern warnings from the government and its lawyers indicating that I had to keep to the agreed-upon statement which is that there was a satisfactory settlement, period. I do apologize for this limited reply; I do not like it, but that is the way things are.

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    Mr. Odina Desrochers: I understand. You said that you were fired by your superintendent, and Ms. Ablonczy said that the superintendent may not have the authority to do that.

    Consequently, where did the signal come from? Did it come from the federal Department of Finance? How was it done? Who gave you the word? Are there any signatures on your dismissal notice?

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    Mr. Bernard Dussault: Unfortunately, all of this is closely related to...

[English]

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    Hon. John McKay (Scarborough East, Lib.): On a point of order, Mr. Dussault is in a pretty awkward situation here. He settled a lawsuit, and he's bound by the settlement of that lawsuit. So asking him questions in and around that whole issue is, in my view, out of order. I would just ask the honourable member to focus his questions on the bill rather than on Mr. Dussault's previous relationship with the government.

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    The Chair: Yes, I think that's a fair comment.

    Could you limit your comments to the bill, Mr. Desrochers, and maybe some of the generalities of the role, but not the specifics?

[Translation]

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    Mr. Odina Desrochers: I would like to answer Mr. McKay and say that I can in spite of everything ask questions. If we are discussing Bill C-421 here, it is precisely because Mr. Dussault was fired. Consequently, I hope that I have the right to ask him questions with a view to discovering the reasons for that dismissal. When I ask him who told him he was fired, he answers that he cannot tell me, because he is bound by an out-of-court settlement.

    It is quite normal, Mr. Chairman, for me to ask who was behind Mr. Dussault's dismissal. However, if this breaches the out-of-court settlement, I am going to respect the reservations he expresses with regard my questions.

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    Mr. Bernard Dussault: My reservations are indeed the same and I do regret that, in fact. I am complying with these limits because I like to respect the agreements by which I am bound. One of the consequences, should I not respect this agreement, would be that the compensation that was paid to me would be seized. That is one of the pressures that I am under, all the more so since I am married and still have young children at home.

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    Mr. Odina Desrochers: Sir, I find that you have been painted into quite a corner by this agreement. That is a personal comment. We hear a lot about transparency, access to information and freedom of expression. I hope that in the future the federal government will conclude much more democratic agreements.

    Thank you, Mr. Chairman.

[English]

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    The Chair: Thank you.

    Mr. Shepherd.

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    Mr. Alex Shepherd (Durham, Lib.): Thank you very much, Mrs. Ablonczy, for bringing this forward to us. I think it's a very useful piece of legislation.

    First, what is the size of the Office of the Chief Actuary? The legislation refers to a person, but I presume they need supporting staff.

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    Mr. Bernard Dussault: It is between 25 and 30 people, most of them being professionals. There are four or five economists, perhaps in a separate area, not really in the chief actuary's office, but let's say at least 20 actuaries and a few support staff.

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    Mr. Alex Shepherd: My concern is that these officers of Parliament seem to almost become a self-perpetuating prophecy. I look at the other officers of Parliament, the AG, the Privacy Commissioner, the Information Officer, and so forth, and these have become huge offices, with large and mushrooming, in my mind, budgets. I suggest that sometimes, as I say, they become a self-fulfilling prophecy, in the sense that if everything were good in government, these people wouldn't have a job. The Privacy Commissioner gives us huge volumes of reports about all the things that are wrong about government, and of course this justifies a larger and larger budget allotment. Have you thought how making this an independent reporting mechanism to Parliament is going to affect the office itself, what kind of manpower you're going to need, etc?

º  +-(1615)  

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    Mrs. Diane Ablonczy: I agree with you, Mr. Shepherd, that in a perfect world we wouldn't need any independent officers or the cost associated with them. Unfortunately, I believe events have weakened the confidence of Canadians in the objectivity and accountability of government operations to some extent. We wish that weren't so, but it is so. That being so, I think we have to ask ourselves how we can alleviate that. If we went to Canadians and said we want to give you objective, independent advice about your social programs and your pension plans, but we think it would cost too much, what do you think they would say in light of the fact that they are now seeing allegations that millions upon millions of dollars have been mismanaged? I think they would say spend the few million it's going to take to give us independent, accountable, objective advice on these important things, because our interests are important too.

    So I think it is up to Parliament, which will be overseeing an independent office, to make sure the allocation for those offices is proper. As you know, we have a new committee doing that. They were the ones who uncovered the fact that at least one of the independent officers was not making proper use of public money, and that individual paid the price, the former Privacy Commissioner, which is proper and right.

    In all these things we have checks and balances. We need to weigh what are the proper checks and balances, but I would say, in light of public attitudes and opinions and facts that are before the public today, moving forward now on greater independence in the oversight of our important social programs would resonate very positively with the public.

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    Mr. Alex Shepherd: I'm being something of a devil's advocate here. I wonder what the limitations to independent reporting mechanisms to Parliament are. We could branch out, we could identify all kinds of other functions governments do where we might want more independent reporting. The Auditor General often comments that her independence is tempered by the fact that she has to go to the Treasury Board every year to get the allotment to run her office, and presumably this would do the same. So do you think you are really gaining that much through this process in an attempt to get greater independence?

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    Mrs. Diane Ablonczy: The answer is yes, but I'd like to have my colleague bring some other thoughts to the table as well.

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    Mr. A. David Pelletier: There are a couple of points on that. One is that, as I mentioned in my brief talk, some of what we do--although I didn't use this expression--is a bit of a black box and hard for people to get a better understanding of what it is we do, but there are also very long-term implications for what we do.

    You make assumptions. You design things today that have an impact on people 10, 20, 30, 40, 50, or 60 years later. The process of going about setting those assumptions is vital. As I mentioned, small changes can make big differences in the numbers.

    Frankly, there is more need for independence here perhaps than almost anywhere else, where small changes can make such a big difference and so few people understand what it is you do. As a result, getting that independence, where you don't have the colouring from up above on which way you may be leaning as you do your analysis, is probably as important here as it is in any other single area.

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    The Chair: Thank you.

    Ms. Wasylycia-Leis.

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    Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you very much.

    First of all, I would really like to thank Diane Ablonczy for this initiative, which I think is a very important contribution to Parliament, especially in the context of the sponsorship scandal. It's clear that the reaction to the Auditor General's report has been so great that I'm sure there are some people who think, in the backs of their minds, if only we had the right to pull her out of her position and get her away from scrutinizing in the way that she does. I think that whole issue has exemplified the importance of the independent officer.

    To answer Alex Shepherd's question, I know it was sort of a devil's advocate question, but I think nowhere is it more important, as Mr. Pelletier has said, than in the area of pensions. If you look at the newspapers, almost every day in the last couple of weeks, there's a story about people worrying about their security in old age. People everywhere, whether it's real or imagined, are living with fear about being able to provide for themselves.

    I think this initiative probably ranks right up there with the Auditor General. I think you've done a great job in advancing an important new policy initiative for the government.

    It's a great idea; it fits with the whole notion of more accountability in government and addressing the democratic deficit. Has Paul Martin come to you and said, “Great idea, I'm going to take it up”?

º  +-(1620)  

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    Mrs. Diane Ablonczy: I appreciate your kind words about the bill. I want to make it clear that it's not my intention to use this bill to beat up on anybody.

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    Ms. Judy Wasylycia-Leis: No, I know.

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    Mrs. Diane Ablonczy: I know you weren't suggesting that I should.

    This is really for Canadians. It's something we're all doing together for Canadians.

    It's uncomfortable sometimes to be a government member. Let's face it, governments of all stripes and backgrounds and philosophies are under increased scrutiny and increased criticism in a variety of democratic countries, because this is a very complex world. As Mr. Pelletier said, small differences and small shadings of things can be taken, because you want to please your boss or you don't want to have grief, and can make a big difference.

    This isn't about what's happening specifically with any particular party. We all have to live with this at the end of the day. If it's the right thing for Canada, that is the reason to go ahead. I would only say that we're at a time in Canada--and other countries are experiencing the same thing, it's not just us--where the public is saying that they need to have an increased level of confidence in things that affect them and things that affect our future, as you very rightly said.

    Nothing is more important to people than their future, their retirement security, and the fact that they would have some confidence that when they reach their older years and can't work any more, they have some kind of a safety net. We, as parliamentarians, as responsible people who care about the mandate we've been given from the people of this country, no matter what party we're elected from, I believe can do a real service and a real favour to the people of this country by putting into place something that would alleviate some of that anxiety.

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    Ms. Judy Wasylycia-Leis: Did you get any comment from the Prime Minister or a cabinet minister suggesting that this was a good idea and they might want to jump on it?

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    Mrs. Diane Ablonczy: I haven't had an opportunity to specifically talk to any of the new people in government about this. I think that they've been busy too. I do know that here we are with a bill that has passed second reading. Of course, it means that many government members were supportive of this bill. It gave me a great deal of confidence that we were on the right track.

    As I say, people from all political backgrounds, but who really take their responsibilities to the public seriously, have said yes, they think this is an idea worth going forward on. I believe, going into an election, we're all in a win-win situation having put into place something we can point to.

    I've no desire to take personal credit for this. As I say, a lot of people had input into it. We, as parliamentarians, can say that we put this into place because we care about the future too, and we want to make sure that everyone has every confidence in what we, as parliamentarians, are doing.

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    Ms. Judy Wasylycia-Leis: I have one problem with the bill, and that's subclause 8(2), which provides for this person to do other work for a fee. I just don't know why that's there. I don't understand the need for it.

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    Mr. A. David Pelletier: I don't know why it's there, but I can give a couple of examples of where it's worked very well. The government actuary in the U.K. is one of the most famous actuaries in the world, a guy called Chris Daykin. He's been hired by the governments of Ireland, Mexico, and various other places to do good work on their social security and medical care programs. They charge a fee for this, and it comes into the government as revenue. They find it worth while. It improves their own work in the U.K., as they get the benefit of doing work in other countries of the world as well, an additional perspective. They've also found it attracts good people into that area, where they know they may get a chance to work on other kinds of things for other people. That may have been one reason behind it; I'm not sure.

º  +-(1625)  

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    Mr. Bernard Dussault: When I was the chief actuary for the Canada Pension Plan and the other public sector plans, we had requests to do work for outsiders. The biggest one was the Canadian Institute of Actuaries. The chief actuary's office always thought it was important professionally, always gaining the benefits of exchanging with the Canadian Institute of Actuaries, and it was good for the chief actuary's office to be involved in the research the Canadian Institute of Actuaries was asking for.

    The point is that in the chief actuary's office there is a big system for the projections, which is very complex. Rather than having the private sector actuaries or the Canadian Institute of Actuaries reinvent the wheel and arrive at estimates that are not consistent, it always looked very simple just to use the chief actuary's expertise and model to answer a lot of requests coming not only from the source I've told you about, but also from each province that might have questions on the future of the CPP if we changed this and that.

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    The Chair: Thank you very much, Ms. Wasylycia-Leis. I'm sorry, you're over time now. I'll have to go to Mr. Cuzner.

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    Mr. Rodger Cuzner (Bras d'Or—Cape Breton, Lib.): I'l like to weigh in on a couple of comments my friend and colleague Mr. Solberg shared about the noble attempt here to depoliticize the numbers. I sort of agree with him on that. If we could just come up with something now that would de-sensationalize the numbers, that'd be good. When we look back at the HRDC situation of years past, the $6,500 boondoggle isn't quite as sexy as the billion dollar boondoggle. So when we get down to the real nub of the numbers, it is a little less sensational.

    What would prevent the chief actuary's office from also bringing crown corporations within its reach?

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    Mrs. Diane Ablonczy: That's a good question.

    As you know, I have some personal knowledge of the HRDC situation. The numbers from the government itself were clear: 97% of the funds that flowed from the HRDC program were without any financial tracking or supervision, and that was the number, I think, that alarmed people.

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    Mr. Rodger Cuzner: Do you anticipate a $50 million investment to compensate for a $65 million shortfall?

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    Mrs. Diane Ablonczy: It's not the shortfall in that case, but the lack of financial supervision and tracking and all the other numbers. In over 80% of the files there was no paperwork, there was no rationale for giving out the numbers, etc. We're not really here to talk about that, but I would point out that the numbers were pretty outstanding there.

    To answer your question about the crown corporations, I think the answer is yes, that the chief actuary could and should have some oversight of the programs going forward for these corporations. Mr. Dussault might be helpful to you there, but I think it would be comprehensive assistance to government departments, including crown corporations.

    Does that make sense to you?

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    Mr. Bernard Dussault: The main area of expertise of actuaries is making financial projections, short-, medium-, and long-term. I don't know the extent of projections involved with those corporations. That's as much as I can say. But Diane referred to certain programs under the chief actuary, medicare, employment insurance, and these are already very big programs. There are other programs that involve financial projections, so definitely, it would be worth while to have them, if possible, under the chief actuary's auspices.

º  -(1630)  

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    Mr. A. David Pelletier: It occurred to me when you mentioned the U.K. government actuary that they do some of the work for some of the crown corporations or the equivalent in the U.K. as well, exactly the same kind of work.

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    Mr. Rodger Cuzner: What would the relationship be between the chief actuary and OSFI? Is there a relationship or not?

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    Mr. A. David Pelletier: My guess would be that the way the bill has been put together here, there would not be--which is not meant to be a criticism of OSFI, by the way. We think very highly of OSFI, and OSFI has actuaries involved in the regulation of the financial sector. But there would not be a need for any relationship per se between these two organizations. They'd be engaged in separate functions.

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    Mr. Rodger Cuzner: To qualify my remarks, we're going through a situation in my area where if we did have access to a chief actuary.... One of the crown corporations found, however unique it may be, that we have two pension plans with surplus funds, and the board of directors floundered somewhat over how to deal with the corporation winding down. In seeking direction from OSFI, we lost about a year, tied up money, affected pensioners for an unacceptable amount of time. Maybe something like this would have averted a situation that was created with our crown corporation.

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    The Chair: Thank you very much, Mr. Cuzner.

    Thank you, Ms. Ablonczy.

[Translation]

    Thank you very much, Mr. Dussault and Mr. Pelletier.

[English]

    Again, congratulations, Ms. Ablonczy, for getting your bill to this stage.

    I would like to deal tomorrow afternoon with your bill clause by clause. I hope you'll be ready, because time is of the essence, as you know, with all this legislation.

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    Mrs. Diane Ablonczy: No problem.

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    The Chair: Thank you very much for appearing.

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    Ms. Judy Wasylycia-Leis: On a point of order, would tomorrow be the appropriate time for me to get further clarification on subclause 8(2)?

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    The Chair: Yes, under clause-by-clause.

    Thank you.

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    Mrs. Diane Ablonczy: I hope you'll be congratulating me on getting the bill passed on third reading.

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    The Chair: Yes, right.

    We're going to adjourn for a couple of minutes while we get set up for the next witnesses. This meeting is adjourned.