CONTENTS
Thursday 29 April 1993
Election of Chair
Election of Vice-Chair
Appointment of subcommittee
Review
STANDING COMMITTEE ON PUBLIC ACCOUNTS
*Chair / Président: Cordiano, Joseph (Lawrence L)
*Vice-Chair / Vice-Présidente: Poole, Dianne (Eglinton L)
Callahan, Robert V. (Brampton South/-Sud L)
Duignan, Noel (Halton North/-Nord ND)
*Farnan, Mike (Cambridge ND)
*Frankford, Robert (Scarborough East/-Est ND)
*Hayes, Pat (Essex-Kent ND)
*Marland, Margaret (Mississauga South/-Sud PC)
Murphy, Tim (St George-St David L)
*O'Connor, Larry (Durham-York ND)
Perruzza, Anthony (Downsview ND)
Tilson, David (Dufferin-Peel PC)
*In attendance / présents
Substitutions present / Membres remplaçants présents:
Cleary, John C. (Cornwall L) for Mr Murphy
Eddy, Ron (Brant-Haldimand L) for Mr Callahan
Also taking part / Autres participants et participantes:
Peters, Erik, Provincial Auditor
Sciarra, John, administrative assistant to Provincial Auditor
Clerk / Greffiére: Manikel, Tannis
Staff / Personnel: McLellan, Ray, research officer, Legislative Research Service
The committee met at 1014 in room 228.
ELECTION OF CHAIR
Clerk of the Committee (Ms Tannis Manikel): Honourable members, it's my duty to call upon you to elect a Chair. Are there any nominations?
Ms Dianne Poole (Eglinton): I would like to nominate Mr Cordiano as Chair.
Clerk of the Committee: Any further nominations?
Mr Pat Hayes (Essex-Kent): I nominate Ron Eddy.
Clerk of the Committee: I'm sorry; Mr Eddy is not a permanent member of the committee.
Mr Hayes: Oh, he's not? I'm sorry. Okay.
Clerk of the Committee: Are there any further nominations? There being no further nominations, I declare Mr Cordiano elected Chair of the committee.
ELECTION OF VICE-CHAIR
The Chair (Mr Cordiano): May I have the names for election of Vice-Chair, nominations for Vice-Chair?
Mr Ron Eddy (Brant-Haldimand): I move Ms Poole be Vice-Chair.
Mrs Margaret Marland (Mississauga South): Did Lyn approve this?
The Chair: No.
Mrs Marland: Did Lyn approve this? Before I vote on it.
The Chair: Are there any further nominations?
Mr Mike Farnan (Cambridge): I move Ms Marland.
The Chair: Ms Marland, do you accept the nomination?
Mrs Marland: As Vice-Chair? Is that what we're talking about?
The Chair: I suppose.
Mrs Marland: I would certainly have liked to have accepted that because I enjoy that opportunity, but I am in another capacity on another committee. I particularly appreciate the nomination from Mr Farnan. Thank you.
The Chair: Seeing as there are no further nominations, I declare the nominations closed and Ms Poole -- I can say that, Ms, right?
Ms Poole: Right.
Mrs Marland: You can call me Mrs Marland.
The Chair: I can call you Mrs Marland. Ms Poole is elected Vice-Chair.
APPOINTMENT OF SUBCOMMITTEE
The Chair: Mr Frankford, do you have a motion for the subcommittee?
Mr Robert Frankford (Scarborough East): I move that a subcommittee on committee business be appointed to meet from time to time, at the call of the Chair or at the request of any member thereof, to consider and report to the committee on the business of the committee; that substitution be permitted on the subcommittee; that the presence of all members of the subcommittee is necessary to constitute a meeting; and that the subcommittee be composed of the following members: Mr Cordiano, Ms Poole, Mr Duignan and Mr Tilson.
The Chair: Any debate? There being no debate, does the motion carry? Carried.
Mrs Marland: Do you know the names of the subcommittee?
The Chair: Names of members on the subcommittee: myself, Ms Poole, Mr Duignan and Mr Tilson.
Mrs Marland: I just wanted to confirm that it is Mr Tilson because he is the senior member of this committee. He's older than I am and he's been on the committee longer. I want him to read this Hansard.
The Chair: Now that we've settled that, and that is an important matter --
Ms Poole: On a point of order, Mr Chair: I just wondered if Mrs Marland would like to provide any evidence showing that Mr Tilson is the senior statesman for their party here or that he's the older member or any of that nature just to assist us with this difficult decision.
The Chair: Given that's not a good point of order, although it is our first day and it is an interesting point of fact, we shall carry on with some of the matters that are before us today.
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REVIEW
The Chair: There are a couple of matters that we need to refer to as a committee still sitting. We're not dealing with any specifics, but I know the Provincial Auditor wanted to make a few comments. He mentioned that to me, so I would just take a few moments to allow him to review a couple of items very briefly and then we'll revert to the subcommittee.
Mr Erik Peters: I just wanted to advise you of some action that I've taken in the intervening period, just to let you know. I have written a letter to Mr Mancini, when he was the Chair, as well as copies to Mr Laughren and copy to Mr Charlton, on the Audit Act.
Very quickly, to summarize, I have advised all three that I would prefer that the government establish an appropriate accountability framework for the ministry in preference to dealing with the Audit Act at this time, and that the Audit Act be deferred until that accountability framework is in place so that the Audit Act can be appropriately worded along the lines of that framework.
The main reason for this is that by strengthening the Audit Act at this particular time, I felt that we would be auditing literally into a vacuum, because we would audit, hold bureaucrats accountable for management action that is not regulated for them, not spelled out in any legislation or whatever.
As you know, already in the first few sessions we had ministries before us which claimed very often that we had imposed the standard against which we were auditing, rather than they themselves being in a position of having to impose that standard. My preference is that through a legislated accountability framework, and there are a number of opportunities through omnibus legislation to move that through, we would prefer that this were to happen in preference to changing the Audit Act. So that was the number one item on my agenda.
The Chair: There are a number of interested members on this subject, but can I suggest that we just hear from the auditor and then refer the matter to another day when we can fully debate and discuss the implications of this, because we are going to be pressed for time this morning. We want to get on to the subcommittee items, and I also have to appear in the House in about 10 minutes. Could I ask to defer this item, and the other item, if you would continue and review that?
Ms Poole: Mr Chair, I just had one question, actually, of clarification. I just wondered whether the auditor had any idea how long this deferral would take, whether in fact he has had discussions with treasury to say whether this would take place over the next six months, when there could be an omnibus bill, or if he has any idea whether we would get changes to the Audit Act within the mandate of this particular Parliament.
Mr Peters: Good question. I've had no responses to my letter from any one of the addressees, so I don't know.
The Chair: As I say, there are probably a number of things that we want to delve into on this subject matter, and I think it needs further and a fuller kind of discussion, because there are a number of views that have been held around here with respect to this, and it's an important item, so I would like to give it full consideration at another date. Can we have the second item and then we'll carry on from there?
Mr Peters: Again, it is in order to put this potentially on your agenda. I've also written a letter to the Minister of Finance on three issues. Number one is the issue of identifying for him, again, that quite a wide variety of savings were quantified by us in the 1992 auditor's report, as well as there were some indirects, and I've asked if some consideration could be given to implementing some of these savings and realizing them in the fight on the deficit and reducing the debt. The quantified number, if you recall, exceeds $300 million in the 1992 report, and then some in some areas. That was the first one.
The second one: I again reiterated the issue of accountability that I related to you in item 1, seeking an answer or some sort of response as to whether this was a practical way of proceeding or some reaction that I could get.
The third one is by far the most serious of these issues, and that's why I wanted it on the table soon, and that is that my office is reviewing whether we can give a clear audit opinion on the accounts of the province, of the consolidated revenue fund, as of March 31. A number of reservations are coming up, and we are currently looking at the form that these reservations will take.
The two major issues are the fund practices, the modified cash basis of accounting, and that allows to defer cash flows and to defer expenditures to future periods which actually pertain to the current period. The amounts that have come thus far to our notice are so substantial that we feel we will have to seriously consider this issue.
The second one is that through the creation of the new crown corporations and the apparent intent of keeping these crown corporations out of the consolidated revenue fund, the consolidated revenue fund may no longer present, in future, the financial position of the province. I just wanted to put you on notice that I've written that letter.
The third very important issue is that the accounting rules he followed in setting the budget are not the same accounting rules on which we report the actual results. Again, I've asked for consideration and I've written that letter, but I have had no response to date.
I just wanted to advise the committee of these. I thought these were important matters that you ought to know at the outset so that you can take them into consideration as you set the business for your committee.
The Chair: Before I turn to members for comment, can I just say that we comment in terms of the entire package; and how we will proceed with dealing with this matter, I think it should be referred to the subcommittee to be scheduled and therefore not deal with substantive matters that have been raised here today. Can I get agreement on that? I'll allow one comment from each party.
Mrs Marland: I have just a question for clarification. Erik, when you describe a clear audit opinion, what is a clear audit opinion? Is that without any encumbrances or limitations?
Mr Peters: That's right. It presents fairly; it does all the right things.
Mrs Marland: With no limitations.
Mr Peters: With no limitations.
Mrs Marland: Okay. And you're asking if you can do that.
Mr Peters: No. I'm advising, actually, the Minister of Finance that matters have come to my notice that may prevent me from giving that clear opinion for the year ended March 31, 1992.
Mrs Marland: That's very serious. And just one other thing for clarification: You said there are different accounting rules.
Mr Peters: That's right.
Mrs Marland: That's also very significant.
Mr Peters: Yes.
Mrs Marland: Mr Chairman, these are very grave matters. When did you write the letter that you haven't had an answer to yet?
Mr Peters: I wrote the letter April 8, and it was preceded by letters to the deputy ministers responsible for those areas.
Mrs Marland: So, Mr Chairman --
The Chair: I'm sorry. I'm just trying to cope with the fact that I'm going to have to go into the House. So could I ask that we --
Mrs Marland: Let Dianne chair it.
The Chair: -- refer this to the subcommittee?
Mrs Marland: No. I don't mind referring it to the subcommittee, but I do want to get a couple of answers now, because the subcommittee can't deal with it without a little bit more information.
The Chair: Okay, fine.
Mr Farnan: I would support the Chair's deferral at this stage. I think we can come back and we can get answers, but we really have to draw closure right now.
Mrs Marland: Why?
Mr Farnan: I'm interested in the same information as you are. I was going to ask that, if it's possible, all members of the committee receive copies of the letter; if it's possible, that other letters in the past that have asked for similar kinds of information be included in the package so that we see the history of this kind of request from the auditor, and if there are any records of the debate within committee and the House related to this kind of issue. I think we should be as fully informed about the issue as we possibly can. But I certainly appreciate the action of the auditor in terms of presenting what he feels are necessary approvals in order to do a thorough job.
Mr Larry O'Connor (Durham-York): Hopefully, those letters would be available to the subcommittee.
Mr Farnan: Can we move --
Mrs Marland: I had the floor, with respect.
The Chair: I'm going to do this: I'm going to allow Dianne to sit in the chair for another couple of minutes. I'm at the whim of the committee, if you'd like to discuss this for another couple of minutes. We are then, I might suggest, having a subcommittee meeting at 11 o'clock. I'd like to ask Mr Duignan --
Mr Farnan: If Margaret wants to discuss it, let her sit on the subcommittee and discuss it, but I don't have to sit here this morning --
The Chair: We are going to have a meeting at 11 o'clock of the subcommittee to detail our agenda. This will be an item for discussion at that time.
Mrs Marland: I think it's disappointing that we can't have the Vice-Chair take over the chair. That's all I'm saying.
The Chair: I'm prepared to do that.
Mrs Marland: So let it happen.
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Mr Farnan: I move a motion, Mr Chair, that the subcommittee get on with the business. The auditor has made a clear request. The entire committee is aware of that request. It's up to the subcommittee to get on with the business. Let's try, during this session of this committee, that we don't grandstand and don't get on soapboxes and we get down to some serious work. Let the subcommittee get on with the job. We don't have to all make speeches about what we want. We all want the facts so that we can make an informed decision on this.
The Chair: Okay. I guess we'll deal with Mr Farnan's motion to allow the subcommittee to deal with this matter. I'm going to have to call for a vote on this.
Is there agreement for that motion to be carried? All those in favour?
Mrs Marland: I think this is unfortunate.
The Chair: We can debate this, if you'd like.
Mrs Marland: I'm not asking to debate it. I was in the middle of a sentence when you started talking to the clerk and Mr Farnan interjected. I did have the floor. I don't want to make a big deal of it, but I'm just saying that's what happened. Fine, wait till 11 o'clock if you want to, but I'm just saying Mr Farnan jumped in and I only have one other question to ask. Let it go.
Mr O'Connor: Would it be possible for a subcommittee to have those letters for 11 o'clock to deal with the matter fully?
Mr Farnan: They can't deal with this in one day.
Mr O'Connor: The subcommittee may not even actually be able to deal with it completely, but anyway --
Mrs Marland: That's not the point.
Mr O'Connor: The subcommittee can decide that and it's been so empowered, so I think it's important to recognize that.
Mrs Marland: Are we going to deal with this next week? Will it be on the agenda next week?
The Chair: Ms Poole wants to make a comment. She had her hand up first and then Mrs Marland.
Ms Poole: I'm certainly prepared to have the steering committee meet to deal with this. My concern is that if there are questions of a very factual nature, questions of the auditor, that should be answered before the steering committee meets, I don't see a problem with getting those questions and those answers on the record so that the steering committee is basically dealing with a full deck and as much information as we have.
I assume the auditor would be invited to come to our steering committee meeting. Is that correct, Mr Chair?
The Chair: If that's necessary. Certainly, we could make that a possibility.
Ms Poole: It's just that it would be particularly important, if the auditor wasn't available to answer some of the questions we might need, before deciding what further action needs to be taken.
The Chair: Could I just suggest that really -- I would like to say this informally, but we're on record. I just think it's important for us to realize that whatever items we want to deal with as a committee can be dealt with if there's a consensus, and I would like to foster that spirit of cooperation and consensus to deal with matters.
This is not, in my opinion, a committee where we would veer away from dealing with items where there is some general importance attached to those items; I think what the auditor raises is very important. I don't think there's any disagreement with the fundamental importance of these matters. The reason for the steering committee is obviously to make this happen in a more efficient and orderly way.
We can then come back to the committee and deal with these items in as fulsome a way as is necessary -- it may take more than one meeting to do that -- and I think all members would be in agreement with that.
Mr Farnan: That was my intent.
The Chair: I apologize this morning. I'm a little frantic, because I do have to speak on this matter. Perhaps I've misjudged the flow of this debate. Mrs Marland, you want to make a final comment.
Mrs Marland: Just to say that I concur with your last comments about consensus and so forth. The point is that it is important that the auditor is meeting with the subcommittee, because what we're talking about, clearly, is the auditor's ability to do his job. He's written a very serious letter three weeks ago.
Mr Farnan: Point of order, Mr Chair.
Mrs Marland: Excuse me --
The Chair: On a point of order, Mr Farnan.
Mr Farnan: I think two things have happened. One, there was a motion for adjournment of the committee. Second, you gave a very clear and concise direction to the committee for the future: You said you want this matter dealt with fully; you want all the facts so that we can work on it. I think those two things together clearly set the direction. The subcommittee will work to set up the meetings so that all the facts are available. You yourself said it may take one or two meetings. It's not something we want to deal with in a haphazard manner. But let's accept the procedures as they exist. We've had a motion to adjourn. Surely that means precisely what it says.
The Chair: Mrs Marland had the floor. I apologize; I'm going to have to go into the House.
Mr Farnan: Mr Chair, the meeting was adjourned. I don't think you understand the implication of an adjournment motion.
The Chair: I'm sorry; I didn't quite hear that there was a motion on the floor for adjournment, so I must have missed that. There was a motion to adjourn that matter -- I understand that -- and Mrs Marland stood down.
Mr Farnan: Mrs Marland refuses to accept the will of the committee; she continues to debate the matter.
The Chair: I would hope that we don't have to have the kind of rancour and acrimony that would lead us not even to agree to how we're going to proceed. I would like to say at this point that I'd hope we could avoid those kinds of discussions. In my capacity as Chair I will try to facilitate a smooth functioning of the committee as much as possible.
I think this matter should be dealt with by the subcommittee. There was a motion on the floor. If you'd want to carry forward with an adjournment because of that motion, so be it. Since there is no disagreement from Mrs Marland, we'll have the adjournment. That's where I was moving.
Thank you. Meeting adjourned.
The committee adjourned at 1036.