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View Kevin Sorenson Profile
CPC (AB)
Good morning, colleagues.
This is meeting number 144 of the Standing Committee on Public Accounts on this Thursday, June 13, 2019.
We are here this morning to consider the budget request of the Office of the Auditor General for 2019-20. I believe we're televised this morning.
Before we begin, I would like to take a minute to commend the committee for the congenial spirit demonstrated by all members. In particular, I would like to thank deputy chairs David Christopherson of the NDP, Alexandra Mendès of the Liberal Party and Pat Kelly from the Conservative Party for their amiable negotiation and drafting of what I felt was an excellent letter to the Minister of Finance. It was a letter that this committee wholeheartedly supported.
All members of our committee recognize the crucial, important work of the Office of the Auditor General of Canada, and therefore unanimously recommend that the OAG be provided with the $10.8 million it requested in its 2019 budget proposal. Furthermore, we strongly recommended that budget decisions relevant to the officers of Parliament, most specifically the Office of the Auditor General, should revert to Parliament.
To discuss the budgetary ask of the OAG, we have a number of guests with us here this morning, but before I introduce them, let's take just one minute for a few sentences by Mr. Christopherson, please.
View David Christopherson Profile
NDP (ON)
Thanks, Chair.
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.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 8:53
Thank you.
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 Minister of Finance. 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 Minister of Finance 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.
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 Minister of Finance 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.
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.
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 Prime Minister 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 Minister of Finance 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.
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.
Nicholas Leswick
View Nicholas Leswick Profile
Nicholas Leswick
2019-06-13 9:05
Thank you very much.
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 Finance, 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 Finance 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 Finance 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.
View René Arseneault Profile
Lib. (NB)
Thank you, Mr. Chair.
Welcome, dear friends. Thank you for your very interesting and informative opening remarks.
Mr. Ricard, I will repeat what I told you when we studied your report on national parks. We have an expression in French meaning that you cannot be trusted. We are here to talk about serious matters: the budget of an important government organization—yours.
Although the Office of the Auditor General of Canada has one of the most important functions in our democratic country, our function is just as important. We have a responsibility to our fellow Canadians.
That said, in your presentation you mentioned that, since 2011, the government has asked you to reduce your activities because it cut your budget. Did I understand correctly?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:11
During the 2011 strategic review—I think the committee had access to the letter that was submitted by the auditor general then—
View René Arseneault Profile
Lib. (NB)
Mr. Ricard, I have only seven minutes, and I would like you to answer me with a yes or no. Am I right in saying that, in 2011, the Office of the Auditor General was asked to reduce its budget and, thereby, its activities? You were not in office at that time; it was Mr. Ferguson.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:11
That was even before Mr. Ferguson. The budget was cut by reducing the workload.
View René Arseneault Profile
Lib. (NB)
That is what worries me. You reduced the workload. Obviously, some studies had to be eliminated.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:11
Those are essentially financial audits that, over time, were added to our mandate. I will give an example.
At some point, the government wanted to have every department's financial statements audited. Finally, that did not come to pass. At the same time, we were asked to start delivering on certain mandates. Given that the government initiative had ended, we suggested that we stop delivering on those mandates.
View René Arseneault Profile
Lib. (NB)
The government of the day suggested that you stop conducting audits, so that you could stay within your new budget.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:12
On a voluntary basis, we embraced the spirit of the exercise.
View René Arseneault Profile
Lib. (NB)
Great. It was on a voluntary basis.
You said that the Office of the Auditor General had to cut its budget by $6.7 million, from 2011 to 2015. Did I understand correctly? Was that annually?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:12
It was an annual cut of $6.7 million.
View René Arseneault Profile
Lib. (NB)
Okay.
I am not jumping around here, as I see the issue of your department's lack of financial resources as a whole. Were the issues of outdated computers mentioned in your presentation predictable when those annual cuts of $6.7 million starting in 2011 were accepted? Was it predicted that things would get there?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:13
I suppose it had to happen eventually, but sometime over the distant horizon. Back then, our computer infrastructure was relatively stable. We had just invested a significant amount in the essential tool we use for our audits, with a multi-year life expectancy.
Computer systems have a life cycle. Be it in 2017, in 2018 or in 2020, ultimately, they will be outdated. However, other elements should be considered here. There is an acceleration of technological development among our clients or entities subject to our audits, so the time when we would have needed to reinvest in our computer system came sooner.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:14
When we let the funding go, everything seemed to be stable for a fairly long period of time. The challenge posed by the acceleration of technological developments leads to staff recruitment and retention issues for us. As I mentioned at a previous meeting, it is difficult to attract the new generation to work for us, as we are not a modern organization.
View René Arseneault Profile
Lib. (NB)
As far as I understand, in 2011, when the Office of the Auditor General agreed, voluntarily, to reduce its costs, its financial resources and its audits—or to sacrifice some of them—it had not been predicted that four, five, six or seven years later, the computer system, among other things, would need a facelift.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:15
I would not say that we had not predicted it. All technology must eventually be updated. So it was predictable over a multi-year period.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:15
It would not have been responsible for us to keep the funding for all those years. We should have rather asked for it in a timely manner.
View René Arseneault Profile
Lib. (NB)
When the Office of the Auditor General voluntarily agreed to be subject to those cuts, had it predicted that, four or five years later, that would account for an optimal increase of 31% of its budget? Had it anticipated that figure?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:15
I would say no. That was not really the amount we thought we would have to request. Technological equipment has a normal life cycle, but we are being asked to carry out additional mandates without additional funding being allocated to us. When it comes to the acceleration of technological needs, which I discussed in my presentation, when we compare ourselves to the rest of industry, we note that challenges exist. Despite the rapid technological advancements, the rest of industry has managed to invest in its audit methods.
View René Arseneault Profile
Lib. (NB)
View Scot Davidson Profile
CPC (ON)
Good morning, and thank you for coming in on such short notice.
My line of questioning is actually in regard to a question of mine in question period. I asked the President of the Treasury Board to account for the refusal to fully fund the Office of the Auditor General. I asked that question on May 31.
I had asked about the Auditor General, yet the President of the Treasury Board responded, “I cannot believe that the member opposite has asked that question”—being me—“when the government cut the Auditor General's budget by 10% and then never built it back”. She said the Liberal government built the budget back because they are “committed to the...ongoing work of the Auditor General”. That was the Liberal government saying they're committed to your ongoing work.
Does the Office of the Auditor General agree with this assessment of the current funding support and the voluntary budget reduction in 2011?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:17
If I understood your question correctly, we had done, on a voluntary basis, an exercise back in 2011 that led us to reduce our vote 1 by $6.7 million. Along with that, to be able to reduce the funding, we suggested that certain audit work was not needed anymore because it was the accumulation of a mandate that historically we have received.
View Scot Davidson Profile
CPC (ON)
Right. You voluntarily did that with other departments back then. We're trying to make this simple now, too, which has never happened before. We had concerning audits for this year coming up on cybersecurity and Arctic sovereignty that were cancelled.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:18
Yes. With the challenges we're facing, we can't keep doing 24 to 25 audits a year. Those will be reduced to 14—
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:19
—for performance audits, because a significant part of our business is mandatory work. On the financial audit, the special exams, we have no choice. That's along with the fact, as we were talking earlier, that the IT aspect accelerated the challenge because of the new technology that came forward. The cloud business and all of that, that's where the suppliers are going. That was not there in 2011. But on top of the IT angle, we do refer in the opening statement to all of that complexity that happened in the industry over the last few years, both from the accounting and the auditing side of the business. That wasn't there in 2011. We could not foresee that, right?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:19
We're now facing that. Our colleagues in the rest of the industry reinvest and add to all of that. We can't. We don't have the money, unless we reduce the performance audits.
View Scot Davidson Profile
CPC (ON)
Do you have any idea why the government would not...? At the end of the day, you're the taxpayer's stopgap. We look to you to audit these things. Do you know why the government would not want to increase your budget? It just doesn't make sense to me.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:20
It's difficult for me to speak of why. Mr. Ferguson, the former Auditor General, put forward his fully detailed business case. I think it's 15 pages long, or something like that. All of the details are there; the breakdown is there. They speak of the additional mandates we have. It lists them and gives them the breakdown, in terms of their costs. It gives the example of the complexities of new investments that the pension plan invests in. They are not just T-bills, where you get the value of the day. It's complicated financial instruments.
View Scot Davidson Profile
CPC (ON)
As I said, especially now with global climate change, what's happening in the Arctic with Russia and China is important. Arctic sovereignty is an audit that taxpayers would want to see—and especially now of cybersecurity as well.
We're just back to.... I'm trying to wrap my head around why the government wouldn't increase your budget, so that taxpayers could actually have a look at those audits.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:21
Again, I can't speak for others.
View Scot Davidson Profile
CPC (ON)
I'm dumbfounded about it too. It's frightening.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:21
We filed a convincing case. We filed a business case that is fully aligned and structured. I was there many times when the Auditor General got a bunch of people in his boardroom to have a fulsome discussion, challenging us, the same way he is challenging departments. A very rigorous exercise was undertaken by him. Aside from that, speaking from our perspective, I can't explain why others don't agree with it.
View Scot Davidson Profile
CPC (ON)
That's what I can't figure out. We're all here challenging you again today. I think the former Auditor General has already been challenged. These are concerning audits to the Canadians and your office is very important to them. I'm still baffled about why the government will not answer that question. It makes no sense to me.
I'll turn it back, Mr. Chair.
View Blake Richards Profile
CPC (AB)
Yes, thank you. I'm happy to take that time.
We have our officials from Finance. Mr. Leswick, given what you just heard about the business case, and everything else, is it possible to get the Office of the Auditor General their requested funding increase? If not, what's preventing that increase from being granted?
Nicholas Leswick
View Nicholas Leswick Profile
Nicholas Leswick
2019-06-13 9:23
It's important for me to lead off and say that I don't want to sound dogmatic in any one approach—that we have it right and others have it wrong. I think that's the wrong perspective. Likewise, from a bureaucratic perspective, we clearly recognize the importance of a strong audit function. In my job, on a daily basis, we work with the Office of the Auditor General in the performance of the financial audit against the governments financial statements. We do that in partnership, and they are fantastic colleagues.
In the context of answering your question, I think it's important to recognize that the office was provided with a significant increase in resources. In fact, they did come to the government and ask for an increase of over 30% in their operating base—some approximately 150 new employees. Through our process, and through the budget process, the government did grant the office a 10% increase in resources, representing a 16% increase in their resource base, over the last four years. That does outpace government spending as a whole.
They weren't stonewalled. It's not as if they received nothing. I understand there's a gap. That gap is what's being argued and debated. I completely respect and understand that. Part of the job we do at the Department of Finance in providing our advice to the ministers is saying no a lot more than we say yes. That's not just picking on the Office of the Auditor General; it's managing government finances as a whole. The requests and proposals far exceed the fiscal capacity to respond.
As I said in my opening remarks, we consider these business cases from a vertical perspective, going line by line. We appreciate the information the Auditor General has provided in his business case. We challenge every line. We consider it from a horizontal perspective, against priorities and spending proposals from across government.
That's where we landed.
I'm happy to answer additional questions.
View David Christopherson Profile
NDP (ON)
Thank you, Chair.
Thank you all for being here. I particularly want to thank you, Mr. Leswick. I don't know whether you drew the short straw or you did something wrong and somebody's punishing you, but they sure threw you to the wolves—potentially. Thank you for being here.
Nicholas Leswick
View Nicholas Leswick Profile
Nicholas Leswick
2019-06-13 9:25
Yes, sir.
View David Christopherson Profile
NDP (ON)
—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.
View Alexandra Mendès Profile
Lib. (QC)
Thank you, Mr. Chair.
Thank you all for being here.
Mr. Ricard, Mr. Hayes, Ms. Thomas and, especially, Mr. Leswick, thank you very much for accepting our last minute invitation.
I will use a bit of my time to ensure that the record clearly shows the government members' position. We all agree with the necessity of an independent mechanism to determine the budget of agents of Parliament. We hold strongly to that.
That said, I thank the Leader of the Government in the House of Commons for beginning the review process of the funding mechanism for those agents and for having thought about our next steps. This is a long-term undertaking, which is not done as quickly as we wish, but we recognize that the leader is also responsible for moving forward all the bills that come before the House.
To the arguments Mr. Christopherson—whom I respect tremendously and admire deeply as a committee colleague—presented related to the rejection of the Office of the Auditor General's request, I would add a fourth reason, which I think is a good one based on what Mr. Leswick just told us. Taking into account the government's financial capacity, it was not possible to provide the office with the additional funding it wanted. That had nothing to do with a desire for vengeance or a fear of what the office could do. Simply put, it was a matter of financial capacity.
Mr. Leswick, do you want to comment?
Nicholas Leswick
View Nicholas Leswick Profile
Nicholas Leswick
2019-06-13 9:34
As I suggested in my opening remarks, the request, the business case presented by the Office of the Auditor General, was duly considered. Due diligence was performed on each of the elements of the business case. Without providing too many specifics of the advice we provided to the Minister of Finance, there was a view that the office was on a growth track, that it had been growing around 15% since, I would say, the trough in its finding in 2015, and that it had been provided with a 10% increase in its resource base in budget 2018 and that it had some time to implement that increase. In a future period, additional funding requirements would be considered at that time.
View Alexandra Mendès Profile
Lib. (QC)
Additional funding over the five years that you've put...?
Nicholas Leswick
View Nicholas Leswick Profile
Nicholas Leswick
2019-06-13 9:35
No, sorry, just to be specific, I meant that there was an allocation approved in budget 2018 and that we would continue to work with the office to consider risks and pressures the organization would face in the future.
View Alexandra Mendès Profile
Lib. (QC)
So in 2018-19, that did not come into account when you studied the credits that would be given to the office?
Nicholas Leswick
View Nicholas Leswick Profile
Nicholas Leswick
2019-06-13 9:36
Sorry. They were granted a 10% increase in their resource base in budget 2018.
Nicholas Leswick
View Nicholas Leswick Profile
Nicholas Leswick
2019-06-13 9:36
In 2019, we continue to engage with the office. They presented the same business case. We have heard the chronology of how they presented their funding proposal. They weren't granted additional funds in budget 2019, but it wasn't as though their business case was dismissed. It's just that they were on a growth track and that we would continue to re-engage with the office in future budget periods to understand the elements of their pressures and resource needs going forward.
View Alexandra Mendès Profile
Lib. (QC)
Mr. Ricard, if I have understood correctly, the issue of human resources is one of your challenges. You have to meet the contractual obligations you have had since 2014-15, I believe. There have been salary increases. I think that is in your presentation.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:37
We are talking about the economic increases of the past few years.
View Alexandra Mendès Profile
Lib. (QC)
Okay. You also alluded to your computing capacity. That issue is not new. A few years ago, you realized that you would potentially need to modernize and increase your computing capacity.
Over the years, have you created a fund to improve your computing capacity, so that you could eventually make the necessary changes, or do you operate on a year-by-year basis?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:37
I mentioned that, in 2011, when we reduced our budget, our computer platforms and tools were stable. However, since that time, the entire industry and all the suppliers' ways of doing things have evolved exponentially. For example, cloud computing did not exist in 2011. We could not predict that.
All those things are changing. So we are facing new policies concerning, among other things, data integrity, automation and information technology security. We have to adapt to that. Those new developments have all appeared over the past few years. In the presentation, we pointed out that the increase in government spending was increasing our challenges. The complexity of business models and financial tools used by the entities subject to our financial audits is a phenomenon that has been around since 2011 and that is changing the environment. In 2017, the Auditor General said that the breaking point had occurred and that, if no measures were implemented, performance audits would need to be reduced.
View Alexandra Mendès Profile
Lib. (QC)
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:39
We needed to invest in all this. We have no choice but to carry out financial audits or mandates. The legislation requires us to do so. We don't have any flexibility in this area.
View Kevin Sorenson Profile
CPC (AB)
Thank you, Mr. Ricard.
Before we go back to the opposition, I have a question for M. Ricard. Mr. Leswick, in his comments, talked about the Auditor General Act; that the Auditor General has the ability 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.
Part of my question is this. Will the AG's office consider making that special report to Parliament. Has he done so in times past? Will he consider so at this time or in the future?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:40
If you don't mind, Mr. Chair, I'll ask Mr. Hayes to answer that.
Andrew Hayes
View Andrew Hayes Profile
Andrew Hayes
2019-06-13 9:40
Thank you very much, Mr. Chair.
The power to issue a special report is in the Auditor General Act. We have never used that. It's been there since 1977, and we've never used that power. It is something that we considered in this context; however, I have to say, with the support of the committee in the hearings that we've had over the DRR and the DP, quite frankly, it's this kind of dialogue from the committee that we would have hoped for in response to a special report.
From my perspective at this point, it wouldn't be necessary.
View Blake Richards Profile
CPC (AB)
Thanks, Mr. Chair.
I guess at the end of the day what really matters with probably almost any policy, but certainly when we're looking at something like this, is what impact it has on taxpayers. What does it mean for everyday Canadians?
You've laid out quite clearly some of the challenges that you're facing and the fact that you're not able to perform some of the audits that you would wish you could perform. Some of the challenges you're facing from being unable to get new technologies, to train staff to today's levels....
Maybe give us a sense as to what that means for everyday Canadians. What does it mean for taxpayers if you can't perform some of these audits? What is the impact going to be on taxpayers?
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2019-06-13 9:42
First of all, if you don't mind, I'll use some of your time, before I forget, to thank this committee for the support that has been provided to the office over the years. We're very thankful for that.
Second, I want to be very clear. We will invest in training, in technology and in all of those challenges. We will do that. We have no choice. We can't do our audit work without respecting quality standards.
What does it mean? Hopefully that will answer some of your questions. It will also mean that, because of having no choice in this regard, we have to reduce the number of performance audits. Those are the audits, like the ones we submitted recently on call centres, protecting the RCMP officers and asylum claims, that we are reducing significantly.
We have no choice. We will invest in those other things where we are facing challenges. We have no choice, but we have to self-fund that. The only place where we can reduce is in performance audits.
View Blake Richards Profile
CPC (AB)
Given that, and given the fact that we have a government that's expanded the size of government quite considerably and has plans to continue to do that with some pretty major further expansions, what is that going to mean in the future? What kind of impact will that have over the next few years to your ability to do the core functions of your job? You've already outlined, of course, the issue of your ability to do some of these other audits. What will that mean for taxpayers in the end? I don't know if we got to that. What's the impact on the everyday Canadian?
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