Proceedings of the Standing Senate Committee on
National Finance
Issue No. 32 - Evidence - May 10, 2017 (afternoon sitting)
OTTAWA, Wednesday, May 10, 2017
The Standing Senate Committee on National Finance met this day at 1:48 p.m. to study the content of Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I welcome you to this meeting of the Standing Senate Committee on National Finance.
[English]
My name is Senator Percy Mockler, chair of the committee and senator from New Brunswick.
I wish to welcome all of those who are with us in the room and the viewers across the country who may be watching on television or online.
As a reminder to those watching, the committee hearings are open to the public and available online on the Senate website at sencanada.ca.
[Translation]
All other committee-related business can be found there, including past reports, bills studied and lists of past and future witnesses.
[English]
Now I would like to ask senators to introduce themselves, starting on my right with the deputy chair.
Senator Cools: My name is Anne Cools. I am a senator from Toronto, Ontario, and I am a faithful member of this committee.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Oh: Victor Oh, Ontario.
Senator Woo: Yuen Pau Woo, British Columbia.
Senator Moncion: Lucie Moncion, Ontario.
[Translation]
Senator Pratte: André Pratte from Quebec.
Senator Forest: Éric Forest from the Gulf region of Quebec.
[English]
The Chair: I take this opportunity on behalf of the committee to welcome officially Senator Oh who will now be a new member of the Standing Senate Committee on National Finance.
[Translation]
I would now like to introduce the clerk of the committee, Gaëtane Lemay, and our two analysts, Sylvain Fleury and Olivier Leblanc-Laurendeau, who team up to support the work of this committee.
[English]
Today, honourable senators and viewers, we continue our consideration of the subject matter of Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017, and also other measures, or what we call the Budget Implementation Act.
As we saw yesterday with the officials of the Department of Finance and from PCO, the bill includes provisions that impact on the Office of the Parliamentary Budget Officer. We thought he may have comments to make on those changes, which are at Part 4, Division 7 of our briefing binder.
[Translation]
Mr. Fréchette, we are pleased to welcome you and your team, so that we can hear your comments and recommendations. Accompanying Mr. Fréchette from the Office of the Parliamentary Budget Officer, we also have with us Mostafa Askari, Assistant Parliamentary Budget Officer and Mark Mahabir, General Counsel and Director of Policy.
[English]
Last week your office published a discussion paper giving your views on the proposed changes that we have to consider. I want you to know that this document, Mr. Fréchette, was circulated to members of the committee yesterday in both official languages.
I am informed by the clerk that you can now make a presentation, and following your presentation senators will be asking you questions. Mr. Fréchette, please proceed.
[Translation]
Jean-Denis Fréchette, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Thank you for this opportunity to discuss with you the changes to the PBO's mandate and operations as set out in Bill C-44. You have in your hands a discussion paper that outlines the major implications these changes could have on the PBO's effectiveness and ability to provide services to members of the Senate and House of Commons.
[English]
There is a paradox in the drafting of this bill. In the introduction, the new mandate is well written and respects the spirit of the PBO's role, as evidenced in new section 79.01. I quote:
Sections 79.1 to 79.5 provide for an independent and non-partisan Parliamentary Budget Officer to support Parliament by providing analysis, including analysis of macro-economic and fiscal policy, for the purposes of raising the quality of parliamentary debate and promoting greater budget transparency and accountability.
The paradox comes later when the bill imposes restrictions on this independence, in addition to undermining the PBO's ability to effectively respond to Parliament's requests. The most restrictive restrictions include:
First, the degree of control that the Speakers of the Senate and the House of Commons will be expected to exercise over the office of the PBO's activities;
Second, the limits on the PBO's ability to initiate reports and members' ability to request cost estimates of certain proposals;
Third, the risks flowing from the PBO's involvement in preparing cost estimates of election proposals; and
Fourth, the restriction on the PBO's access to and disclosure of information and the lack of an effective remedy for refusals to provide access to information.
I see no problem in submitting a work plan to the Speakers. However, the PBO would become the only officer of Parliament to require the approval of both Speakers for his or her annual work plan.
It seems clear to me that this will place considerable pressure on the two Speakers, particularly as regards their neutrality, and even more so during an election year, especially in the absence of a joint committee that has yet to be created.
Furthermore, if one adds to that obligation that the direction and control of the office of the PBO and its officers is vested in the Speakers, it is easy to see how time consuming it could become for them and their own administration. That is why I'm fairly confident that this aspect of the bill will be reviewed and revised by the government.
[Translation]
The current wording of paragraph 79.2(1)(f), which deals with the freedom of any member of the Senate or House of Commons to request an estimate of the financial cost of any proposal can be interpreted in more than one way and should be clarified. Finally, with respect to access to information, the absence of any mention of a remedy in the event of refusal suggests to me that it will be up to the two Speakers to intervene in the event a department or agency refuses to provide information requested by the PBO. Or even to refuse to make the information public. Again, this would be likely to put additional pressure on the two Speakers. This would represent a challenge for those around them who might find themselves dealing with matters of parliamentary privilege.
[English]
I would like to add one additional issue. This is the only forum where I will be able to do that because it pertains to senators and their distinct role in the Senate.
There is a clause in the Bill C-44 regarding when Parliament is dissolved. Let me quote it: "If Parliament is dissolved before a report is provided to the chair of the committee or to the member under subsection 3 or 4, the Parliamentary Budget Officer shall discontinue work under request.''
I have a problem with that. I understand the objective of this clause. Clearly, they don't want the PBO to publish a report during the caretaker period, and I can understand that.
The situation is that they put the role of senators at the same level as the role of members of the House of Commons. Members of the House of Commons do not exist when the writs are tabled. When the writs are tabled, the House of Commons is dissolved, and therefore members of the House of Commons cannot receive the same kind of services.
Senators still have access to full services. I'll give you an example. The Library of Parliament provides full research analysis and reference services to all senators during the caretaker period. They do not do the same for members of the House of Commons.
This clause, for me, is something that really put senators in the same basket, if I can say, with members of the House of Commons. I don't think this is fair for the Senate. Personally, in terms of "shall discontinue,'' I don't understand why the PBO shall discontinue the work. Publishing a report during the caretaker, I can understand. "Shall discontinue'' the work for a senator who has made a request prior to the caretaker, I do not understand. I think it is an attack regarding the independence and distinct role of senators.
[Translation]
My colleagues and I would be happy to answer your questions.
Senator Pratte: I would like to bring up two different matters about access to information. First, in terms of the restrictions in paragraph 79.4(2), if I understand correctly, you are not in favour of the ones to be added, though they already exist. The law is drafted differently, but you are critical of the restrictions that have been kept.
Mr. Fréchette: The only difference between the wording of the act as it presently stands and the current bill is that the term "data'' has been replaced by a reference to economic information, which is fine. Crown corporations have also been added. So two terms are different: "information'' rather than "data'' and the addition of "Crown corporations.''
That said, the only remedy that we currently have is a decision going back to 2015, where the Speakers of the Senate and the House of Commons submitted a request to the Standing Joint Committee on the Library of Parliament. The joint committee sent us a letter indicating that, if we had problems with access to information from departments, we could at any time turn to the three committees mentioned in the act — three at that time and four in the future — in order to make use of their power to require documents and to invite people to testify. So it was a matter of using them as a lever with departments and agencies. That is the approach that exists at the moment. Will it exist later? I have no idea. However, if the PBO reports to the two Speakers, I will turn to them so that I can get access to information.
Senator Pratte: You lead me to my next question. Yesterday, Privy Council officials appeared before this committee during our study of this particular part of Bill C-44. We asked questions about it and they replied that this bill would change nothing for a possible remedy for the Parliamentary Budget Officer. So that remedy remains possible. As for potential recourse to the Federal Court, we were told that the coming change would put the Parliamentary Budget Officer on an equal footing with other parliamentary agencies. If the Parliamentary Budget Officer felt that a department was doing something illegal, he could turn to the courts.
Mr. Fréchette: I am in partial agreement with the second part. By becoming an independent officer of Parliament, the PBO could not send a reference to the Federal Court on a technical issue, as in 2012. He could still turn to the Federal Court for access to information. That is an extremely costly approach, and it is an approach that the public service uses to indicate that it is always going to refuse. The PBO will always be forced to go to court, which will cost a fortune, and, in my opinion, is not a very viable remedy. I prefer having recourse to a parliamentary committee. Even better, from now on, the Speakers of the Senate and the House of Commons will be responsible for overseeing the Office of the Parliamentary Budget Officer. Ultimately, when a department refuses a request for information, there will be a breach of the two Speakers' parliamentary privilege to have access to information.
Senator Pratte: Can you clarify that for me? I am not sure I fully understood.
Mr. Fréchette: Under the new bill, the two Speakers become the de facto managers of the Office of the PBO. When the Parliamentary Budget Officer makes a request for access to information to a department, let's say the Department of Finance, and the department refuses, it is saying no to the PBO as an administrator and saying no to both Speakers.
Senator Pratte: So with the recourse to the Speakers of both chambers, that is to say to the power of parliamentary committees, does that not become more certain and more effective, in a way?
Mr. Fréchette: From an administrative point of view, I realize that the process can be heavy if the refusals become systematic.
Senator Pratte: What tool would you like to see written into the legislation that would make you more effective in the remedy process or in the case of a refusal from a department or a Crown corporation?
Mr. Fréchette: That is an excellent question. In our document, we quote the example of the Auditor General, who has a memorandum of understanding with all departments, negotiated with the Privy Council Office. A memorandum of understanding is established between the Privy Council and the Auditor General, giving him access to information from all departments, so as to make life easier for the Speaker of the House of Commons or the Committee on Public Accounts, to which the Auditor General reports.
Senator Pratte: Is that memorandum of understanding defined in the act?
Mr. Fréchette: No. The memorandum of understanding was set up a long time ago between the Privy Council and the Auditor General.
[English]
Senator Marshall: Was there any participation by your office in the preparation of the legislation?
Mr. Fréchette: In January 2016, the PMO called the office and asked us to prepare some kind of quasi- or draft legislation, our vision of a better legislation for the PBO, which we did.
We don't know who leaked the document during the summer, and we published the document on our website. That was the only contact with anyone from the PMO, PCO, public service legislature or whatever. That was the only contact. We never had any other contact since then.
Senator Marshall: Is there any similarity between what you produced and what's here now in the bill?
Mr. Fréchette: One word.
Senator Marshall: One word. Thank you.
Mr. Fréchette: "Information'' instead of "data.''
Senator Marshall: I know the Institute of Fiscal Studies and Democracy proposed amendments. Have you seen those?
Mr. Fréchette: Yes, I did.
Senator Marshall: I want to talk about the administration and the role of the two Speakers. I want to refer first to page 80 of the bill. There's a section there under "Administration.'' It says:
The direction and control of the Office of the Parliamentary Budget Officer and its officers and employees is vested in the Speaker of the Senate and the Speaker of the House of Commons, . . .
Then it talks about the annual work plan having to be approved by the two Speakers and prepared after consultation with the two Speakers. When I read that, it's my opinion it infringes on the independence of the Parliamentary Budget Officer.
Do you have any comments? It seems that it is related. The two Speakers have to approve the work plan of the PBO, but they also have to consider the budget of the PBO. I don't know what the term "consider'' means, whether it means approved. It seems like that's almost a conflict.
Would you have any comments on that?
Mr. Fréchette: When approving the budget when you're an agent of Parliament, and I will use the example of the Commissioner of Ethics, for example, the commissioner has to table her budget to the Speaker for approval. This is normal procedure because you're under Parliament, not under public service and therefore it's through the Speakers that the estimates and your annual budget will be approved through Treasury Board.
I have no problem with the estimates as I said before. I don't think PBO should have a problem with working with the Speakers to estimate or budget the need, the requirement or the resources for a year.
The problem is the involvement in the work plan. The work plan will be linked to the estimates, depending on what you do. I'll give you an example. During a caretaker or election period, of course, the resources will have to be increased because you know the PBO will have to do the costing of electoral platforms. We may have to ask for more resources that year because costing platforms can be really time consuming in terms of human resources and very costly. That would be the relationship between the work plan.
The problem with the work plan and the approval is the involvement and the challenge to the neutrality of the Speakers. Again, I use the example of the platform. The two Speakers will have to rule whether or not we dedicate enough resources to the costing platform during an election year. We will probably estimate that we're going to give an amount of money for a party, compared to another party, because one party has more members and so on. You can see the difficulty with that.
As well, during a normal work plan throughout the year I can see the debate between the Speakers from the Senate and the House of Commons about how much resources you dedicate to Senate standing committees compared to the House of Commons. It's going to be back and forth, a long and difficult process.
Senator Marshall: I must say I'd be concerned about the considered part because it's not defined. It's talking about the two Speakers considering the budget of the PBO. That is not precisely defined, so I'd be quite concerned as to exactly what their involvement would be with regard to the budget.
We spoke earlier about the section of the bill on page 83 where we're talking about if Parliament is dissolved and the fact that the PBO shall discontinue work on request. This came up yesterday when we were talking to the officials about the legislation. The comparison I made is that the Auditor General is conducting audits throughout the year. When there is an election call, he doesn't stop his audits. He doesn't stop his work. He just carries on with the work. He doesn't release reports, which I suspect would be the same condition applied to the PBO, but on the requirement that the work be discontinued I must say I find that an infringement.
There are a couple of other sections that I'd like your comments on. The section on ministerial agreement is on page 83 and goes over to 84. It uses the term "personally.'' It's talking about the minister. It says that the minister can personally agree that his or her department will provide assistance to the Parliamentary Budget Officer. That sounds very unusual.
Could you give me some insight into your interpretation of that?
Mr. Fréchette: I'll ask Mr. Askari to answer that question. It's his favourite section.
Mostafa Askari, Assistant Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: The purpose is that while the ministers are responsible for their departments they have to provide permission to their staff, the deputies and others, to provide information and help to the Parliamentary Budget Officer.
That is not necessarily the problem. The problem is the second step because once the minister instructs the deputies to provide information and help to the PBO, the legislation says it's at the discretion of the deputies how they would help the PBO. Now, that opens a door that the deputies could decide not to do it or to decide to provide very little help to the PBO at the time. That's really not going to help us that much.
If the legislation is approved as it is, when we plan for the platform costing we have to plan on the basis of the assumption that we're not going to get a lot of help from the department at the time. We have to allocate enough resources at the time to ensure that we meet our obligations under the legislation. The deputies really don't have any obligation to provide any kind of help to us. If they wish to do it, they can do it, but there is no obligation on their part.
Senator Marshall: Could you also speak to the reports and the release of the reports? It has to be provided to the Speaker. I think most officers of Parliament provide their reports to the Speaker for tabling, but there is a comment in the legislation about when to make it public.
Could you speak to that and whether there is something there we should be concerned about?
Mr. Askari: This is one small restriction. It's not really going to stop the PBO from releasing the reports because the way it is worded is that we have to give the reports one business day before we release it to the Speakers, to the committee or to member that has requested the report. Then, within one business day we can publish the report. There is no provision for approval from the Speakers or from the committee or from the member to release the document. We can release the document, as a schedule, within one business day.
Senator Marshall: Is that same condition put on the other officers of Parliament?
Mr. Askari: I'm not sure.
Mr. Fréchette: For example, using the OAG you will release it. You will do a private briefing to the Public Accounts Committee. It's different with the Information Commissioner because they don't have the same number of reports that the PBO has. The Information Commissioner will table her report with the appropriate committee mentioned in the legislation.
The OAG, as you very well know, tables two times, in the spring and the fall. It's very well known. The schedule is known. There are no surprises.
If I may, we conducted in the fall a Nanos survey specifically on the interests or the costing platform, and on the perception out there of stakeholders. Senators, members of the House of Commons and staffers were members of the survey group. The result was that only the public service said they didn't like the way we table our reports. All other people never really commented on that.
Stakeholders from the public service complained that there was no notice. Actually, they used the word "ambush.'' I think they want to correct that "ambush,'' which is not true by the way. Everybody knows, because you receive the emails, that 24 hours in advance we send a notice to all parliamentarians first, to the media and to interest departments that we will publish a report.
Because of Nanos, since January we have published our upcoming reports three months in advance on our website. We listened to the comments and we adjusted to the situation. Providing a report in 24 hours, without any risk of not being able to publish it the day after, I have no problem with that.
Senator Marshall: I must say I was very disappointed in the legislation. I thought it would be a couple of steps forward but unfortunately it's a couple steps backward.
[Translation]
Senator Forest: Thank you for coming to our committee. You can hear our concerns. In order to fully exercise the role of Parliamentary Budget Officer, one of the indispensable conditions is independence. The PBO's work plan must be submitted to the Speakers of both houses. So it is not the Parliamentary Budget Officer's work plan; it belongs to the Speakers of both houses. Independence is a very sensitive subject. Perception is often more important than reality.
It is quite a paradox in this bill, I find, for the Parliamentary Budget Officer to be asked to stop all his work. At the same time, during election periods, he has been given the mandate to evaluate the costs of election promises. Don't you think that that could create an environment that could damage the Parliamentary Budget Officer's independence and credibility? We know how fast campaign promises can be made, especially when the race is tight and election day is getting close. Does the Parliamentary Budget Officer not run the risk of a lot of criticism, given that evaluations can be contested? Developing campaign promises is not always an exact science.
Mr. Fréchette: You are quite right. It is a huge risk. There is also a huge risk that the function of the PBO could become a political instrument that could be used to influence the path of certain proposals. Contrary to what the Liberal Party initially proposed during the election campaign — that campaign platforms should be evaluated — the bill as written mentions "proposals.'' That is really how policies are developed. It is no longer a platform that goes from A to Z. They are piecemeal proposals that political parties perhaps try out on the Parliamentary Budget Officer in order to test their validity or significance. The PBO is not required to give them information as long as the results are not made public. The office will become an agent through which political parties develop their policies.
Senator Forest: It is quite the huge challenge to evaluate commitments in an election platform. As well as being piecemeal, we see an increase in ad hoc commitments as we get closer to the end of the campaign. That is something else again.
One other aspect concerns me. In general, legislation allows budget provisions to be applied. I certainly agree with having an act, but not putting it inside an omnibus bill like this one. We must try to see how we can better equip the Parliamentary Budget Officer and make his role more effective. I do not understand why such an important matter is being dealt with inside an omnibus bill, which is actually intended to implement the provisions in the budget.
Mr. Fréchette: Is that a question?
Senator Forest: It is a comment.
[English]
Senator Eaton: Mr. Fréchette, the Parliamentary Budget Officer has had quite a history of controversy, when I think back to Prime Minister Harper's time and now with Prime Minister Trudeau's time. I'm wondering, if you had to create the perfect mandate for the Parliamentary Budget Officer, what would it be and who would you report to?
Mr. Fréchette: Probably not the one that the public service would like to see. That would be my first answer.
We developed one. We proposed our vision, as I said in a previous answer, last summer when we proposed a new draft legislation. The role or the mandate is well described here. It's about transparency, credibility, and all that. The way that we operate right now is not something terrible. It is still operational.
Looking at this, if you remove the approval process, the control and direction by the two Speakers, you still report to the two Speakers. I have no problem reporting to them. I have no problem tabling a work plan with them. We do our work plan internally, taking into consideration what the PBO will do during the year for both the Senate and the House of Commons. There is no problem in doing that. We discuss with the two Speakers about the estimates and the budget requirements for the operations of the PBO.
I still have no problem, but it is imperative in the process to give this independence in terms of choosing the proper reports and analyses we will do during the year.
Senator Eaton: Your predecessor, Kevin Page, said in an interview:
When I was the Parliamentary Budget Officer we were often talking about difficult issues of the day, costing wars, costing crime bills, fighter planes. And I ask myself when I look at the legislation; would we still be able to do this? And my concern is that we would not. . .
Mr. Fréchette: I agree with that.
Senator Eaton: Would you like to have the same powers as the Auditor General?
Mr. Fréchette: No. Let me explain why. The AG operates in an ex post environment. All the AG reports are done on something that has happened in the past. We operate on forecasting, for example, and doing an analysis of a bill that is still to be put in place and so on. It's quite different.
The AG has to go back and forth between departments because it's something that happened before.
Senator Eaton: They have to give him all the information he requires, right?
Mr. Fréchette: That's right.
Senator Eaton: Wouldn't you like that?
Mr. Fréchette: Having perfect access to all information, of course.
Listen, we understand it's not always possible to have all the information. This committee is well aware of the situation we have with CRA, which doesn't want to provide us with all the information we would need to do a tax gap analysis. I can understand that at some point eventually it's difficult.
Cabinet confidence is another issue. We don't ask for all the details. We just ask for the documents circulating at the level of cabinet confidence that should be made public.
As I mentioned to a Senate committee last fall about gender-based analysis, the departments have a lot of information on gender-based analysis about the budget. Those documents are not available, and I don't understand why they are not. They are considered cabinet confidence, and they should not be.
Senator Eaton: You would basically be happy with the present legislation as long as you didn't have the Speakers setting your priorities?
Mr. Fréchette: Let me think about this.
Senator Eaton: I'm trying to find out what you really want.
Mr. Askari: We published a model legislation last July. Right now, given there is another legislation before you, we don't necessarily want to go back to that. The framework we put in that legislation is the framework we thought would be consistent with a really independent budget officer. It is consistent with the OECD principles for budget officers. It gives the independence and access to information that the PBO needs to do his job effectively.
The current legislation has put many restrictions on the operation of the PBO. We have never understood what is the real problem the government and the public service wanted to address by imposing those restrictions on the PBO. They have never defined the problem.
We asked the PCO when we met with them after they tabled the legislation, and they said that there was a lack of focus on services to Parliament. This was news to us because all we had heard from parliamentarians was that they appreciated the work we were doing. The only lack of focus was really on satisfying the public service and the government, not necessarily Parliament.
That seems to be the problem and the reason for imposing the restrictions to somehow control what we do so it reduces the impact on the government of the day and the public service rather than providing services to Parliament.
Senator Eaton: Would you send the clerk a draft of your memorandum of last July? We weren't sitting then.
Mr. Askari: Sure, we can certainly provide that to you. That is not a problem.
Senator Eaton: That would be very nice. Thank you.
Senator Woo: Good afternoon and thank you for your presentations, Mr. Fréchette and Mr. Askari.
I want to pick up on the issue of paragraph 79.2(1)(f), which has to do with the ability of members of Parliament and senators to put requests to the PBO for studies to be done. I'll read the specific clause:
. . .shall, if requested to do so by a member of the Senate or of the House of Commons, estimate the financial cost of any proposal that the member is considering making before the Senate or the House of Commons or a committee of either or both houses.
You've commented on it fairly extensively in your report. Thank you for that, by the way; it is very helpful. Mr. Fréchette, your presentation also touches on this issue. In fact you specifically asked for this phrase of estimating the financial cost of any proposal to be clarified.
When I read this clause I think it's totally wide open. When you say that you should entertain "any proposal'' that a member of the House of Commons or a senator is considering making before the Senate or the house or a committee of both houses, to me,that's the universe.
Would you not also accept that explanation as giving you the most possible flexibility to accept a request of any kind?
Mr. Fréchette: That's my interpretation.
Senator Woo: We'll hear from both of you.
Mr. Fréchette: We have two legal counsels who also have different opinions on that.
I'm with you. My definition of this is like that. The problem with this is that it doesn't pertain or relate to matters over which Parliament has jurisdiction. This means there is no limit, as you said. It's truly open. If you ask the PBO to do a costing of a high-speed train between Vancouver and Seattle, which is probably not really the jurisdiction of Parliament, and let's say that it's not, you will be able to do that.
The public service has a different interpretation about the wording "any proposal'' and "considering.'' A proposal would be something that could be restricted. You may consider having a proposal, but what is your proposal? Is it part of a motion to a committee, a private member's bill, or an amendment? It doesn't relate specifically to a proposal by the government.
Mr. Askari: You put the same question to the officials yesterday, and the response, to me, was actually very clear. Their intention was to limit what members of the Parliament and senators could ask us to do, specifically on the costing of government programs. For most of the costing of government programs that we have done over the past nine years, the request came from individual members.
That clause prevents individual members from asking us to cost a proposed government program. For example, if the government proposes to have a new Employment Insurance program, members cannot ask us, based on that clause, to cost that. A committee can ask us, but not members, or we can do it as part of our work plan as proactive work, but then we have to anticipate what the government is going to propose, which is not going to be very easy.
It is restrictive in that sense, from my point of view, and that was confirmed by the interpretation of the officials yesterday when they responded to that. They actually said it is specifically for only proposals that the members are making, not necessarily government.
Senator Woo: To follow up, do you see it possible for your work plan to respond to situations, which arise in the course of the year, that have a level of effort in a budget allocation that would then allow you to cover off the items you did not consider previously?
Mr. Askari: If it is subject to approval, we don't know. If it's subject to approval of the Speakers and they decide not to approve that part of the work plan, then we can't do it. That again goes back to the approval process.
Senator Woo: It's a question of approval.
Mr. Askari: That approval is very restrictive in the sense that it's not up to the officer to decide what kind of analysis would be useful for Parliament to see. It would be up to the Speakers to decide, and that is very restrictive.
Senator Woo: You rightly point out the paradox in this legislation, but I wonder if there's another paradox that you might comment on. I sense a certain tension in the representations you've made. On the one hand, there's concern about the restrictions on your ability to take up studies of one kind or another and take requests of one kind or another. On the hand, there's another strand of your representation that has to do with the open-endedness and the possibility of being overwhelmed by requests.
For example, if we take Mr. Fréchette's interpretation of this clause, which I also took, that it basically opens up the universe, you could be swamped by crazy requests coming from all of us here. I speak for myself. For example, a high- speed train from Seattle to Vancouver sounds like a great idea.
You would have a choice of rationing. The same would apply to the provision for you to do costing of election proposals, not platforms. I can just imagine the kind of flood of ideas that could be coming to you, not just from the main parties but secondary parties as well.
I'm trying to get at this paradox of rightfully trying to make sure that you are not shackled in any way to do the work you need to do but also having to work within life's very real budgetary and resource constraints.
Do you see some part of this bill, even if the wording is wrong, that is trying to help us as the Parliament for whom you are working to put some parameters around your work plan so that you can make choices in the interest of all stakeholders involved?
Mr. Fréchette: Let me begin with this. In the section you just mentioned the word "shall'' is in front of all these requests. As you know, it's underlined, which in legislation means it's a new word. It's exactly the same wording or similar to the previous wording, but now it's "shall.'' You're right in terms of that.
Here is my take on this: Whoever wrote this perceived the two Speakers as ministers. A minister is there to do exactly what you mentioned: filter or reduce maybe the workload or reorganize the workload of the department. The Speakers are not ministers. They have no role to play like that, and that is the problem with this.
Whoever wrote this had a vision that Speakers are ministers and that they will play the role we see in the public service, with each department reorganizing and filtering all these requests.
This is the error and the paradox. They base their vision of the Speakers and the legislative branch, which you're part of, as if it were a department, and it is not.
Mr. Askari: Your interpretation of that is very generous in many respects. As I mentioned earlier, when we posed the same question as to what is the purpose of all these restrictions, they never told us that they were trying to help us manage our workload.
They said there was a lack of focus on our services to Parliament, so they wanted to reorient and refocus the efforts of the PBO, which I do not understand, because it's completely false. We have always been focused on helping Parliament.
Senator Cools: I'm looking at the document by which you introduced your comments, and it says:
I see no problem in submitting a work plan to the Speakers. However, the PBO would become the only officer of Parliament to require the approval of both Speakers for his or her annual work plan.
Who made you an officer of Parliament? How did you determine that you were an officer of Parliament?
Mr. Fréchette: The legislation will make the PBO an officer of Parliament, not similar to the Office of the Auditor General or the Information Commissioner, both having their own legislation. It will be similar to the Ethics Commissioner. The PBO will become an agent of Parliament under the Parliament of Canada Act.
Senator Cools: There is a lot of confusion. We still do not know what an officer of Parliament is or about any of these issues, but we do know that there's a group of people who describe themselves as officers of Parliament. We can find no origin anywhere in any of the literature or any of the authorities that makes reference to officers of Parliament.
What I have discovered, though, is that this term begins in Privy Council. It seems that Privy Council used to hive off this group of individuals: the Auditor General, the Chief Electoral Officer, that whole group, and treat them as one special group. They began the practice of calling them officers of Parliament.
You could call them parliamentary officers to the extent that their commissions and appointments were not created by Her Majesty. Most officers are created by commissions and so on, but they were created by a decision of the two houses together and Her Majesty in Parliament.
To some extent one could say they are parliamentary officers, but there's no such constitutional animal as an officer of Parliament. As a matter of fact, Parliament rarely exists as an entity except in throne speeches, Royal Assent and so on.
The officers of the Senate, the officers of the House of Commons and Her Majesty's officers are three distinct groups. There's no officer. I'm just wondering why this term means so much to him and why it seems to be endeared but has no constitutional existence.
The Chair: Does the PBO have any comments or can you answer that question? If not, you could supply the clerk with additional information in writing.
Mr. Fréchette: It's always a pleasure to answer the questions of the deputy chair.
You're totally correct. Agents of Parliament and officers of Parliament are very elastic terms. The Senate clerk, for example, is sometimes perceived as an officer or an agent of Parliament and so on.
Mark Mahabir, General Counsel and Director of Policy for PBO, Office of the Parliamentary Budget Officer: You are correct. There is no definition of officer of Parliament.
Senator Cools: Section 79.1.(1) says:
There is hereby established the position of Parliamentary Budget Officer, the holder of which is an officer of the Library of Parliament.
I call that to the attention of senators for clarification.
Mr. Fréchette: Under the current legislation, not the proposed legislation.
Senator Cools: Yes but, remember, that was created by the Federal Accountability Act back in 2006.
[Translation]
Senator Pratte: I would like to go back to the issue of remedies when a department refuses to respond to requests. Our objective is to improve the bill if it is appropriate to do so. When I asked you what your ideal remedy was when you are refused, you told me about the Auditor General's model. He operates through a memorandum of understanding with each department, with the blessing of the Privy Council. Now, that is not in the Auditor General Act. Is there no way to make some amendments, or should things be done outside the bill, using political will to move forward?
Mr. Fréchette: At the moment, nothing in the bill indicates a parliamentary remedy. As I mentioned in my remarks, there should be. For example, as we have discussed previously, the two Speakers could act as a remedy mechanism. The legislation proposed last summer includes an approach under which departments must agree to a protocol that would be written into the legislation.
With all that, officials from Infrastructure Canada appeared before your committee last week. They told you that they were not in a position to give you any information, but that the PBO had it. When you asked us the question, our answer was that we had the information but that the department was not giving us permission to provide it to you. I think Senator Eaton asked the question. We may get the information, but there are restrictions. That is the problem we have tried to correct in our legislation. We have to be able to provide information. Having information is one thing, passing it on is quite another. We are sometimes faced with problems like that.
Senator Pratte: There is a second problem: the confidentiality of the information. In terms of the confidentiality of information, you prefer the legislation as it currently stands, rather than as proposed in Bill C-44. Instead of turning to the criteria set out in the Access to Information Act, as in the current bill, the deputy minister is given the responsibility to decide whether you can disclose the information or not.
Mr. Fréchette: The current act has no specific recommendation. The parliamentary remedy was done outside the act.
Senator Forest: When you look at all the measures proposed in this bill, do you think that you should be given your autonomy back by removing the requirement for the Parliamentary Budget Officer to submit his annual work plan to the Speakers of the two chambers?
Mr. Fréchette: Submit it?
Senator Forest: Have it approved.
Mr. Fréchette: You are francophone, but this concerns everyone. Always watch out when the English text of a bill is much longer than the French text. My 30 years on Parliament Hill have taught me that this means that something was added later. The rest of the text is written by experienced legislative drafters. Then, suddenly, a long paragraph in English appears, though it is very short in French, because the translators have worked very hard to try and simplify the text. This is what we get as a result.
To answer your question, if that paragraph were removed, I would already be 75 per cent happier. As Mr. Askari mentioned, with the whole issue of the evaluation of election platforms, we will see what lawmakers or political parties think, or will think, about it. If the paragraph about approval were removed and the matter of management and control of the office was also removed by refining the text, we would be at 80 per cent. However, providing for parliamentary remedy through the two Speakers would give us better access to information.
Senator Forest: I am a new senator. I would certainly not make that comment if I had more experience: to want to limit the autonomy and independence of the Parliamentary Budget Officer is more administrative will than political will.
Mr. Fréchette: More "public service'' than legislative.
Senator Forest: I just received the confirmation I was waiting for.
The Chair: If I may, before we continue with the other witnesses, we would like to thank you, Mr. Fréchette, and the team of the Office of the Parliamentary Budget Officer. Thank you for your presentation and for answering our questions.
[English]
Honourable senators, we will suspend for five minutes so that, as per the rules and regulations of the Senate, the Senate Chamber can take our attendance.
[Translation]
Honourable senators, for the second part of our meeting, we have invited two experts to clarify the changes proposed by Bill C-44 to the mandate of the Parliamentary Budget Officer. We have Sahir Khan, Executive Vice- President of the Institute of Fiscal Studies and Democracy at the University of Ottawa. I would like to point out that Mr. Khan is the former assistant parliamentary budget officer. Thank you for accepting our invitation, Mr. Khan. We also welcome Geneviève Tellier, a full professor at the School of Political Studies at the University of Ottawa. Thank you for accepting our invitation, Ms. Tellier.
[English]
Professor Office of the Auditor General's research field is about public finance management, with an emphasis on the Parliamentary Budget Officer. She published on this topic and studied the impact the changes included in Bill C-44 would have on the Canadian PBO.
You will make your presentations, Mr. Khan and Professor Tellier, and following that senators will be asking you questions.
[Translation]
I will now ask Professor Tellier to give her presentation, followed by Mr. Khan and his presentation. Professor Tellier, please go ahead.
Geneviève Tellier, Full Professor, School of Political Studies, University of Ottawa, as an individual: Thank you, Mr. Chair. I would like to begin by thanking the committee for inviting me to appear as part of the study on the provisions that change the mandate of the Parliamentary Budget Officer.
My research focuses on the policies and budgetary procedures of Canadian governments. I was interested in the creation of the position of Parliamentary Budget Officer. I would like to briefly address three main points about the bill: the work plan, the reports and analyses, and the estimates during the election campaign. I will be pleased to answer your questions afterwards.
To begin, I will address the approval of the work plan. Right now, there is no accountability mechanism for the PBO in Parliament. The approval plan introduces a mechanism like that. However, we may wonder whether it is done properly. For example, would it not be better to ask for accountability at the end of the year than at the beginning, as is the case for other officers of Parliament? I use the term "officer of Parliament'' in a very broad sense. Also, should there not be a specific committee appointed to oversee the work of the Parliamentary Budget Officer? For instance, I am thinking of the House of Commons Standing Committee on Government Operations and Estimates, whose mandate is very similar to that of the Parliamentary Budget Officer, or the House of Commons Standing Committee on Finance, which frequently speaks for the Parliamentary Budget Officer.
Second, I would like to address a few points about the Parliamentary Budget Officer's reports and analyses. The Officer is required to provide reports at the request of the committees. The bill now includes a new committee, the government operations and estimates committee. To me, that seems to be entirely consistent with the mandate of the Parliamentary Budget Officer. Reports are also provided at the request of parliamentarians. In that case, parliamentarians' flexibility is reduced. The Constitution does not give members without portfolio the power to introduce money bills. However, it gives parliamentarians the power to hold the government accountable. The amendments will no longer allow them to use the PBO's resources to carry out this accountability work unless the requests are from the committees or if the Officer has anticipated these requests in the annual plan that he must submit.
In terms of the tabling of reports, the publication rules are clarified. These rules are consistent with the current practices of the Parliament of Canada. Could it have been done otherwise? I am referring to the practices introduced by the former parliamentary budget officer. However, regardless of the method chosen, there will always be partisan debates and issues related to the timing of the circulation of the reports.
My third point deals with estimates during an election campaign. This is a mechanism that is beginning to spread in Canada. Quebec, Ontario and New Brunswick have passed legislation on this, but the measures are not the same everywhere. Unlike in New Brunswick, going through the PBO will not be mandatory, which should simplify the process. However, departments would not be required to provide information that might be relevant. This could result in partial estimates only. Is a measure like that useful? It might address a need to better regulate election promises. I am referring to the estimates during the election campaign. Right now, political parties are not subject to any rules for their promises. Imagine if private companies could do the same. Can this be part of the PBO's responsibility? Yes, certainly.
Finally, section 79.01, which is the first section of the legislation before us, explicitly refers to macroeconomic analyses, whereas most of the previous studies have been microeconomic analyses, focusing on a specific sector. I wonder about the relevance of that clarification. Thank you for your attention.
The Chair: Thank you very much, Ms. Tellier. I will now give the floor to Mr. Khan.
[English]
Sahir Khan, Executive Vice-President, Institute of Fiscal Studies and Democracy, University of Ottawa, as an individual: Thank you, chair, deputy chair and honourable senators, for the invitation. It's a privilege to be with you today.
I would like to make brief remarks with respect to the Budget Implementation Act, particularly as it relates to the Parliamentary Budget Officer. My remarks with respect to the BIA draw upon my personal experience supporting the prime minister and clerk of the privy council with the development and execution of budgets and as a former assistant Parliamentary Budget Officer working under Kevin Page, where we built the current PBO and supported parliamentarians for the first five years of its history.
My views are also informed by the extensive work undertaken over the last few years by our team at the University of Ottawa Institute of Fiscal Studies and Democracy in support of the OECD, IMF and World Bank efforts to build, sustain and evaluate independent fiscal institutions, and in turn strengthen parliamentary democracy.
[Translation]
A number of perspectives should be considered in relation to the proposed legislation. One of the basic principles is whether parliamentarians can effectively review the budget, as well as debate, deliberate and vote to give free, informed consent.
[English]
From my work supporting the prime minister and cabinet, I know first hand about the massive asymmetry of information between the government and the legislature. Ministers have available to them the analysis and advice provided by thousands of public servants in central agencies, let alone the tens of thousands of public servants in line departments.
As honourable senators know too well, the situation is quite different in Parliament. The government's current reporting system falls well short of the needs of parliamentarians.
[Translation]
However, parliamentarians cannot vote or take a position on legislation without the help of independent, non- partisan analyses that support their role.
[English]
Given the uncertainty around fiscal projections and cost estimates, they need additional data points backed by evidence. When considering new measures they need relevant and timely tests of reasonableness to know if, when and how to intervene.
The government can be applauded for bringing forward legislation to help strengthen the PBO position. Indeed, it is seldom in the interest of a sitting government to empower the legislature, and by extension the loyal opposition. However, it is very much to the benefit of Canadians to have an effective Parliament able to hold the government to account.
I would like to be clear that IFIs, independent fiscal institutions, are by their nature disruptive. Within the community of IFIs, PBOs tend to be even more disruptive than other models by virtue of their role in strengthening Parliament. IFSD international comparative research has found that IFIs impact the very wiring of the relationship between the executive and legislative branches, and the impact is not limited to the political level.
IFIs also tend to be disruptive to the public service. They create a more competitive market for information, not just for parliamentarians but for media, financial markets and for citizens and taxpayers. IFIs request information from governments while also thrusting new information into the middle of debate. In doing so, IFIs can expose weaknesses in both the form and content of the financial and non-financial information that governments provide to legislatures.
A look at over 40-year history of the U.S. Congressional Budget Office, CBO, provides reason to be optimistic. Like in Canada, the early years of the CBO were turbulent, but good legislation, strong and capable leadership and a progressively hospitable environment inside Congress saw the CBO grow roots. Over time, institutional relationships were rewired, leading to better processes, information flows and the outcome of debates. The strong foundations of CBO and the evolution of the actors within the fiscal ecosystem resulted in empowered legislators and a strengthened legislature.
[Translation]
But let's go back to Bill C-44. In its 2015 election platform, the current Liberal government promised that the Parliamentary Budget Officer would be truly independent.
[English]
Our analysis of the BIA, which has been provided to committee members, was based on two key reference points: the current legislation in the Parliament of Canada Act and the OECD's principles for IFIs, of which Canada's PBO is a member and to which Canada is a signatory.
Accordingly, the government did four things that represent important improvements to the PBO function: The PBO position will now be an officer of Parliament. Parliament will have a role in the selection of the officer. It will be harder to fire the PBO as the officer could only be dismissed for cause; and the PBO mandate is being expanded to help political parties cost election platforms.
However, the Liberal platform commitment has been diminished in at least five specific ways. The mandate has been reduced, forcing it to merely react to government reports rather than undertaking proactive analysis.
The BIA largely takes away the ability of individual parliamentarians to request cost estimates. The rights of parliamentarians to ask for cost estimates for the F-35 or Truth in Sentencing Act would be taken away.
The BIA renders ambiguous the PBO's self-initiated work on government estimates. This will matter on such key files as the performance of infrastructure spending.
The BIA reduces the independence of the PBO by requiring the Speakers of both chambers to approve its work plan, and restrictions have been placed on the timely publication of PBO analysis by requiring that it be submitted while Parliament is in session.
[Translation]
In addition, the following gaps in legislation are missed opportunities for improvement.
[English]
The BIA does not mention qualifications for the PBO position, i.e., expertise and experience in federal budgeting. This is both an OECD principle and a key success factor that underlies the IFI's credibility and its ability to recruit and retain skilled staff.
There is an absence of any meaningful recourse for denied information requests. Today the PBO can seek recourse to the Federal Court of Canada. The proposed legislation takes this right away.
There is no requirement for independent external evaluation of the PBO. The PBO should be independent but also accountable for the use of its resources and the outcome it delivers for stakeholders. The United Kingdom's Office of Budget Responsibility has such a requirement enshrined in legislation.
[Translation]
The proposed legislation does not fully honour the government's own commitments to make the PBO truly independent and, in many respects, may be seen as a step backward from existing legislation.
[English]
It is my hope that honourable senators would take the opportunity to propose legislative amendments to the BIA, but improving the PBO's legislation is not enough to strengthen Parliament. Our estimates system is badly broken. There is very little scrutiny taking place on the billions of voted statutory spending. The system needs better alignment between budgets and appropriations. We need better parliamentary control gates for accountability of spending and performance. In short, there is more to do.
Thank you for your attention. I would be pleased to take your questions.
The Chair: Thank you, witnesses. We will go to questions.
Senator Marshall: There were several sections in the legislation that I would like your views on.
The first one is regarding the estimates. It's paragraph 79.1(1) and it's the section on "Inclusion in government estimates,'' on page 80 of the bill. It says that the estimates referred to shall be considered by the Speaker of the Senate. When I read that, I would consider that an infringement on the independence of the PBO.
What would your interpretation be of the word "considered?'' It's not defined.
Mr. Khan: Thank you for the question, senator. My interpretation would be the same as yours. This is not a requirement placed on other officers of Parliament.
Senator Marshall: Ms. Tellier, would you have a comment on that?
Ms. Tellier: I would agree. I wonder why we put so many restrictions on the PBO.
Senator Marshall: There is also a section that says if Parliament is not sitting the work of the office shall be discontinued. That's on page 83 of the legislation.
Would you have any comments on that?
Ms. Tellier: For me, it's very interesting. Who decides what to publish? That was a big issue during the first mandate of the former PBO. The attempt was to create something new to get the information out as soon as possible. One advantage of that was to engage the public in the work of the PBO, which I thought was interesting and a novelty in our Parliament.
Now it goes counter to our general practice. If we look at practices of other officers or agents of Parliament, and I am thinking about the Auditor General, for instance, the reports are published if Parliament sits and if it doesn't then we wait. We could decide to go one way or the other. I don't think there are perfect methods to use, but we have to understand the implications of that.
There will always be arguments made that things were manipulated. Did the government shut down Parliament not to have the report? I doubt we would go that way just for the PBO, but an effect of shutting down Parliament could be that the report won't be out, as we have seen with the Auditor General.
If we go the other way and say the PBO decides when to launch, and if there is an election that's also another issue. There is no good or right answer that everybody would agree on, but we have to understand.
What I liked under the old system was that we're going somewhere new, a new method to be used in Parliament. One of the advantages, as I said, was that we are engaging the public. We are providing everything. Everything is on the table and the public has access. It is a good thing to reconnect parliamentarians with the population at large.
Mr. Khan: Senator Marshall, the recommendations of the OECD are to publish simultaneously and instantly, to avoid perceptions of manipulation of the work and favouritism to any one group, and to ensure that all parliamentarians are receiving the work at precisely the same time and that the government is not getting the advantage of seeing the work ahead of parliamentarians. That's why it's one of the principles of the OECD.
I don't think any of us are talking about publishing a report during a writ period. I think we're talking about instances when Parliament isn't sitting, for example in the summer, but things still happen. Economies go soft. There are fiscal problems.
The question is: Should parliamentarians be without information? I've spent five years on the Hill, and I know parliamentarians aren't on vacation during those times. They are doing duties that happen to be in other locations.
Senator Marshall: That section is specifically directed toward if Parliament is dissolved. The reports can't be released, but it also says work has to be discontinued. It seems to me that infringed upon the role of the Parliamentary Budget Officer.
Mr. Khan: I'll give you an example of the F-35 report that we did. It was one of mine. That takes months to produce. Whether or not Parliament is sitting, that work has to continue. It means we don't publish it or talk about it, but it's very difficult to stop/start these processes. It's difficult enough for a rather small office to tackle really big files that are given to the office by parliamentarians.
Senator Marshall: Another section was raised with our previous panel and there was disagreement as to the interpretation. That's the section talking about the mandate when Parliament is not dissolved, which goes from paragraph 79.2(1)(a) to (f). It relates to requests by a member of the Senate or House of Commons as to whether the PBO can undertake any work that a member would like. It says it has to relate to any proposal that the member is considering making before the Senate or the House of Commons.
We had two witnesses previously. One thought it was fine and one thought it was more restrictive on the PBO. I know what your views are, Mr. Khan, because you mentioned it in your opening remarks, but could both of you address that again?
Mr. Khan: Sure. The current legislation is clear because it says that parliamentarians, senators and MPs may request a cost estimate of anything that falls under the jurisdiction of Parliament. Since Parliament appropriates all the money, it gives a rather wide latitude for parliamentarians to ask.
Some of these matters may not be bills that a member may be bringing forward. It may be a forward-looking procurement for which money will be appropriated in the future, or is already being appropriated to that department and the department is considering.
That includes things like the F-35 fighter jet, which was a request from two parliamentarians. The view of the IFSD is that this would be restrictive and take away the important right of individual parliamentarians to ask a question and get an answer to something that they found puzzling.
Senator Marshall: Ms. Tellier.
Ms. Tellier: Yes, I agree with what has been said. A major aspect of the bill for me of concern is that we are taking out something very important for parliamentarians. We talk often about how parliamentarians are not engaged in parliamentary affairs, especially in accountability. That was one way to re-engage parliamentarians in holding government to account. Now it's limiting their margins of manoeuvrability only to table in the house. It's really reducing their ability.
Senator Marshall: Their mandate.
Ms. Tellier: Yes.
Senator Marshall: Am I allowed one more question, Mr. Chair?
The Chair: Absolutely.
Senator Marshall: Could I have your opinion? The new mandate now for the Parliamentary Budget Officer is going in as amendments to the Parliament of Canada Act.
When we look at other positions reporting to Parliament, they have their own legislation, for the most part. The Auditor General has the Auditor General Act; the Chief Electoral Officer has the Canada Elections Act; the Commissioner of Official Languages has the Official Languages Act; the Privacy Commissioner has the Privacy Act; the Information Commissioner has the Access to Information Act; the Commissioner of obbying has the Lobbying Act; the Public Sector Integrity Commissioner has the Public Servants Disclosure Protection Act; and the Conflict of Interest and Ethics Commissioner has the Conflict of Interest Act but there is also something in the Parliament of Canada Act.
I was surprised to see it in the budget implementation bill and as an amendment to the Parliament of Canada Act. Could you comment on that? Were you surprised also?
Ms. Tellier: Yes, I was surprised that it was part of an omnibus bill, which supposedly we shouldn't see anymore. That was my main concern. I'm very pleased that your committee is looking into that.
It is part of the Parliament of Canada Act. Formerly the PBO was under the Library of Parliament, which made sense, but if we wanted to do things the right way I suppose we could have a distinct piece of legislation.
There is also a precedent in Ontario that has its own piece of legislation. It is the only other place in Canada where there is the equivalent with more power. We could have done it that way.
Mr. Khan: I would agree. I think a suspicious mind might consider that this was by design, because this mechanism within the Parliament of Canada Act provides some actors within the system with additional levers of control over the PBO.
Senator Marshall: Thank you very much.
[Translation]
Senator Forest: Thank you very much for being here. The Parliamentary Budget Officer appeared just before you. He explained that he believes that the ideal environment for fully carrying out his duties includes a memorandum of understanding with all departments, as is the case for the Auditor General, and oversight by the Privy Council. Do you think that is an ideal environment for the Parliamentary Budget Officer to carry out his mandate freely and fully?
Mr. Khan: Thank you for your question. When Mr. Page, Mr. Askari and I started developing the Office of the Parliamentary Budget Officer, we created several memoranda of understanding with our former colleagues in the Privy Council. Developing memoranda is not a problem. The problem arises when a government does not want to disclose certain details or data. That's when difficulties arise. The question is whether the PBO has sufficient recourse if the government decides not to share the information. The memoranda themselves are relatively easy to establish. The problem arises when one of the two parties requests information but has to use a recourse mechanism in order to have access to that information when the other party does not want to disclose it. A memorandum is not enough in my opinion; a recourse mechanism should be established for the PBO.
Senator Forest: In the event of non-disclosure by the department in question.
Mr. Khan: For example, like a Federal Court as an arbitrator.
Senator Forest: There seems to be a fairly paradoxical element that goes beyond any question or apprehension we might have with respect to this bill. On the one hand, the Parliamentary Budget Officer would discontinue work if Parliament were dissolved and, on the other hand, he would be given the mandate to estimate the cost of the political parties' election promises.
I can give you an example of a situation in which I'm sure the Parliamentary Budget Officer made a lot of friends. For a bill on the transfer of family farming and fishing businesses, the Department of Finance had estimated the costs of the bill at over $800 million. Subsequently, the Parliamentary Budget Officer reassessed the cost at $279 million.
If the Parliamentary Budget Officer is given the mandate to assess the costs of election promises, don't you think he would be in an extremely delicate situation, depending on the results of the election and how correctly he was able to estimate the costs of election promises?
Mr. Khan: I agree with you. Estimating the cost of a bill or government procurement or making an estimate of an overall electoral plan is difficult. That work is often not done very accurately. It is an estimate. It is worthwhile for this committee to continue its study and perhaps do more research on other plans, such as Australia's, for example. How was Australia able to minimize the risks of an unrealistic cost estimate during elections?
There is not much time during an election period. I mentioned earlier that it took several months to provide cost estimates for the F-35s and, even afterwards, there was a lot of controversy.
Imagine the situation during an election campaign, where work is done fairly quickly, which can have an impact on the election. I think it is worthwhile for this committee to do more research on the ways that could build some confidence in the system.
Senator Forest: It may be an external factor that could have a major impact on the results of the vote.
Mr. Khan: Yes. However, there are some models. Australia has developed some protocols to manage those risks. But this bill does not clearly show that everything has been well thought out.
[English]
Senator Woo: Good afternoon, witnesses. Thank you for your testimony.
Maybe I can pick up on Senator Forest's comment on election policy costing and ask Mr. Khan if he would care to be a little more definitive. You have been quite definitive on many other questions, but I'm not quite clear what your view is on the suitability of either election policy costing or election platform costing as part of the mandate of a parliamentary budget officer.
I know you've asked us to study the Australian model and the Dutch model. We can do that, but we have limited resources and time. Could you say a bit more?
Perhaps Dr. Tellier will want to comment on that as well.
Mr. Khan: It's difficult to be precise. My point to Senator Forest was that it introduces elements of risk in an election. These cost estimates are sometimes very difficult to do if information is unavailable. You don't want to make mistakes. The reality is that when you're doing in-year work like a PBO does there is always an element of risk, but you certainly don't want that to influence an election.
In Australia, the PBO does a lot of confidential work for political parties during the year. This is not supported by OECD guidelines, by the way. When an election does roll around, they have seen enough. They have enough information to put that platform costing together from the various pieces they've accumulated.
In the Canadian context, if that work hasn't been done you have a very short window to have this work done.
There are modalities that potentially could work. There was a proposal that the OBR in the U.K. certify the costing undertaken by public servants. They do that for the budget, but there was a proposal for them to do that. We had recommended to the British treasury and to the OBR that they not do it for the reason of risking the politicization of the office.
My point and the point of our institute is it is a positive direction for the office to level the playing field for parties that don't have access to the same level of information as perhaps an incumbent government might. The modalities are important because the risk is in fact having a less than desirable outcome for all parliamentarians, if executed poorly.
Senator Woo: Professor Tellier?
Ms. Tellier: Yes. There was the example of New Brunswick which failed. They had a piece of legislation during the last election where it was mandatory for all political parties to estimate their projections, and it didn't work. I don't know the exact details, but they abolished the law. Now they have introduced a new piece of legislation.
It well represents what is currently going on in Canada. There is a political will to have such regulation to help parties present their own platforms. For me, it's not so much that this isn't the law. It favours the government and political parties because they have what they call an independent assessment of their proposal and they can say, "You see, PBO agrees with us.''
There is no obligation here in Ottawa o in New Brunswick to divulge the information. You could ask the PBO to undertake the estimate and then it would be: "Okay, I don't want to publish it so I won't say anything.'' Maybe this could be good.
Senator Woo: It's a bad idea.
Ms. Tellier: Yes, it is a bad idea, so why not? My understanding of the legislation was to give the opportunity to political parties to ask for an independent assessment, which would be done by the PBO. Yes, I think the PBO has the reputation or the qualifications to undertake such an exercise.
In Quebec, they have given that responsibility to the Auditor General, which in my view is a bad idea because accounting is not the same as economic projection. We should be very careful about that.
It's not mandatory, so you don't have to use the services of the PBO. My main concern is that an article says that the PBO could ask a ministry to provide the information, and the ministry could provide it or not. That, for me, is a danger because then the PBO doesn't have access to information. You could have a good argument about partisanship because you could say that the government doesn't want to help opposition parties.
Who decides? Could it serve a party in government but not others? For me, that's where partisanship could be an issue.
Senator Woo: I will switch to your presentation, Mr. Khan, and your five points where you see the legislation falling short of the Liberal platform.
Would it be correct to say that if the legislation were able to address point four, which is the reporting to the Speakers, getting their approval and so on, it would effectively take care of points one, two and three, but not five, because timing issues are still written in another part of the legislation?
My question, essentially, is to pick up from where the current Parliamentary Budget Officer testified. I think he said that if you could deal with the reporting issue, you would deal with 80 per cent of the problems or something like that.
Would addressing point four take away the problems of points one, two and three?
Mr. Khan: On this point I would respectfully and strongly disagree with the current PBO. There is an issue of independence. You can imagine if you were a Conservative senator and having the work plan approved by the Speaker who is a GIC appointee of the prime minister. It creates a certain conflict.
This is not a commentary on any specific Speaker or the office, but it does risk politicizing the Speakers. That's an issue unto itself, and it's a feature that has been added that's not a feature for other agents or officers of Parliament.
The other issues are actually quite important in that the mandate in the current legislation established by the previous Conservative government was quite clear. The difficulties in that legislation had nothing to do with the mandate. That was well written, concise and crystal clear.
The repairs that the Liberal government has proposed actually address some of those shortcomings. A bunch of other language has now been added that confuses. It's not clear language, as I noted in my remarks, but very clearly it has taken away some rights from parliamentarians. The PBO had an unrestrictive, proactive right to look at the economy, nation's finances and estimates. Now this puts the PBO in a more reactive mode, waiting for the government to produce something and then reacting to it.
That takes away the nimbleness of the PBO to serve parliamentarians who very often need information on their timetable, not that of the government. This legislation actually impedes those abilities for parliamentarians who are simply trying to discharge their Magna Carta rights. Taking away the right to do costing is again a loss of rights.
On the estimates analysis, my understanding is that the government is worried about the PBO looking at performance, thinking that's the job of the AG. In fact, within the estimates we have the departmental performance reports. Parliamentarians need to know about performance on an in-year basis, not just via public accounts and via the audit process.
Senator Woo: Could I just interrupt for a second? I'm a little concerned that I may have asked the wrong question, or maybe I'm misunderstanding your answer, particularly when you say that you strongly disagree with the current PBO. I hope everybody understands what exactly it is that you disagree with.
My question was: If we were to eliminate, as you recommend in point four, the reporting requirements so that there's no reporting requirement for the budget officer to present his work plan to the Speakers, which means that he can put whatever he wants in his work plan, including a contingency to deal with matters that arise in the event of a recession or a special initiative of a budget, would that deal with, as the Parliamentary Budget Officer has said, 80 per cent of the problems with Bill C-44?
Is that where you disagree with him?
Mr. Khan: Yes. I think it's the degree to which it addresses the problem. It would take away one lever of control over the functions of the PBO, but the language would remain, in that the mandate in the legislations is still largely reactive. As opposed to the current legislation, which makes it very clear that the PBO may undertake proactive analysis, the proposed legislation in fact says that the PBO should react.
Taking away number four does dull some of the impact of those others, but does it then give the parliamentarians back the right to request costing? It wouldn't fix it on its own.
It addresses some of the issues, but I don't think I would go so far as to say it's 80 per cent. It's one of the issues. There are still issues around language and precision and things that have been deliberately excluded. Like I said, it would not address any of the issues over recourse when the government decides not to provide the PBO with information that it requires to discharge its obligations.
Ms. Tellier: I don't have the Mr. Khan's points, so I'll go with what I hear.
I also agree with what was said about 80 per cent would be solved. For me, as I said before, the major issue is about limiting parliamentarians in what they could request from the PBO. For me, that's the major feature of this bill.
I'm for reporting. It's a good thing. It was missing in the former legislation. The finance committee, at one point, tried to have the PBO come once a year to explain what he was doing. Should he report at the beginning of the year or at the end of the year? Maybe yes at the beginning. At the beginning you're anticipating, so you cannot be very precise, so be careful in what you are asking.
It would be new, yes, but, as you may have sensed I'm not against novelty in Parliament, either, but, yes, as Mr. Khan said, the way it is now is an issue in the bill
You made me think of something about what is in the law, what is in the bill, and what is not. For instance, in the past, the PBO was a fiscal simulator. You could go on the PBO website, enter different fiscal scenarios and see the outcome. Under this new bill, the PBO would not be able to do that because it's not part of his mandate anymore. We are kind of limiting what can he do.
The simulator is useful for parliamentarians because many have asked questions about the fiscal impact of such measures, but it's also interesting for the public at large. People could go on the website and have information.
I'm repeating it, but do not forget the link, not just with parliamentarians but with the public at large.
The Chair: For clarity, before I recognize Senator Pratte. You said, Mr. Khan, it would apply to a Conservative senator. I believe that this would apply to any senator under the changes that are being requested, and not just Conservative senators.
Am I right?
Mr. Khan: You're correct. I was giving an example of something to take a political extreme. The issue is that right now parliamentarians enjoy a very direct relationship with the PBO.
The Chair: Thank you, Mr. Khan.
Senator Pratte: I'm interested in the issue of a remedy when a department or a Crown corporation refuses to provide information to the PBO.
I notice in your suggested amendments that you provide for the PBO notifying the relevant committee and also referring the matter to the Federal Court.
Yesterday, we had witnesses from the Privy Council who told us specifically that that they had taken out the possibility of referring to the Federal Court. Maybe I misunderstood, but I think one of the reasons they gave was that no other agent of Parliament had the possibility of referring a matter to the Federal Court. If the PBO thought that a department was acting in an unlawful manner they could go to the courts. The possibility of asking a committee to intervene with was always open to the PBO.
Would you care to comment on both these points?
Mr. Khan: One of the lessons we learned in the first five years was that during a minority government we had very comfortable recourse to the committees and very thoughtful deliberation among committee members where the committees themselves would intervene and assist the PBO, assist us in getting information we required.
My view is that's a proper functioning of a relationship between the PBO and a committee. It's very important in the current legislation that the PBO actually refers to three committees that it serves. It probably should have also added the Standing Committee of Government Operations and Estimates since it's in the PBO mandate. I'm not sure if that was an oversight originally.
That is a recourse that worked well for us for a while until there was a majority government. Then the committees could never quite muster the votes to request or compel a deputy minister to provide the data to us.
Very often, the standard line of the deputies was to tell us that it wasn't within our mandate to get the information, or we're only allowed to have data, not information. People would be parsing words.
When we went to seek a Federal Court reference in 2012, Justice Harrington of the Federal Court seemed to confirm that given the peculiarities of the way we were structured under the Library of Parliament it was recourse, as long as other channels had been first exhausted.
That was useful because then departments would have to consider that there might be consequences, that there might be independent non-political arbiter over whether the mandate was as it was interpreted by the PBO.
The difficulty here is: Without recourse, what is the incentive for cooperation by the government? The Auditor General has access to certain parts of cabinet documents. When there's a dispute over accounting policies at the end of the year, the arbiter is the Auditor General. The tie goes to the Auditor General.
I don't recommend it, but if the legislation wants to give such powers to the PBO by all means you can take out the Federal Court recourse. I'm not actually an advocate for a PBO looking at cabinet documents. That's a job of an auditor, not of a budget officer. Without some recourse it's too easy an experience. In Canada, in particular, it has been very easy for government to simply deny the information to the Parliamentary Budget Officer and to parliamentarians.
Senator Pratte: When I look at the Auditor General Act, the language of the act is not clear to me. I'm not a lawyer so maybe there's something that I don't see. What gives the Auditor General the authority whereby the department gives it all the information that it wants.
Obviously there is something, either in the legislation or whatever, that gives it the authority the PBO doesn't have. In the act presently, and certainly in Bill C-44, it does say that the PBO has a right to that information.
Mr. Khan: As it has in the current act, which didn't help us. It didn't help us get the information. We could ask for it, and they could still say no. Over time Auditor General protocols and orders of council were developed to give access, but when you go through the act that empowers the Auditor General it's relatively straightforward.
I'm not a lawyer either. My background is in corporate finance. It pretty much says, "Do what you have to do to get the job done.'' There's a clarity in the legislation. The advantage for audit institutions like the AG is that they've had a 100-year head start. They've had opportunity to create protocol understandings with government.
As I mentioned in my remarks,for independent fiscal institutions doing the work with more immediacy in any year tends to cause more disruption. Those protocols have not yet been developed. Good legislation can be helpful because when there's clarity around the understanding of both what a PBO is eligible to receive and the recourse if they don't do it, you don't get quite the political battles we saw in the past when the PBO kept trying to do the work we were mandated to do.
Without the recourse, it's too easy for people to say it's not within your mandate. Okay, then what? We had 12 people. When we went to Federal Court, we went in with students from the University of Ottawa law school. That's what we had to do, but we believed in it because our belief was you were entitled to that analysis and it was within our mandate. Justice Harrington gave us a pretty favourable obiter dicta to that extent.
Without some teeth in the legislation the incentives aren't necessarily there for governments to share with the PBO. We should consider that it's not really the PBO. They are choosing not to share with Parliament when parliamentarians are simply trying to discharge their Magna Carta rights.
Senator Eaton: I want to pick up where Senator Pratte started about not having any recourse.
In another point above point three you say that the BIA renders ambiguous the PBO's self-initiated work on government estimates and that it will matter in such key files as the performance of infrastructure spending. I'm also thinking of things like the infrastructure bank and military procurement.
Can you give us a little more meat on that sentence?
Mr. Khan: I think you're quite right. The estimates are a rather broad subject. They include the appropriation bill, but they also include documents ostensibly designed to provide some support for Parliament so they can vote on the appropriation bill. You have the reports on plans and priorities, the departmental performance reports, and in addition you have quarterly financial reports that are supplementary to all of that, though not necessarily part of the estimates process.
The trigger in the Parliament of Canada Act currently that allows the Parliamentary Budget Officer to undertake proactive research in the estimates is that it gives parliamentarians that purview to say this is within the rights of parliamentarians to discuss, deliberate and to oversee the government to the extent that parliamentarians are holding the government to account.
The language, as it has been rendered rather ambiguous, starts to take away. It says the PBO can react to certain estimates reports. What if parliamentarians want to hook at a forward-looking procurement like the F-35. Parliament is already appropriating money to the defence department to examine fighter jet options. You have the right. This starts to take away the right to examine issues that you consider important for which Parliament will be appropriating money to the government.
Senator Eaton: Do you think there is wording in an amendment that we could tighten that a bit? I think that's terribly important.
Mr. Khan: I continue to believe the original wording, which I should have memorized by now, that the Parliamentary Budget Officer provided independent analyses to the Senate and the House of Commons on the national economy, state of the nation's finances, and the estimates of the government, and could cost anything at the request of parliamentarians and the jurisdiction of Parliament.
Senator Eaton: And could go forward. As you say, with this new infrastructure bank being set up, if you read the Twitter accounts, it has only been given two hours of debate. It might be an interesting subject for the Parliamentary Budget Officer to go ahead, after it has been passed to see whether it's been properly set up.
Mr. Khan: That bank will be capitalized with $35 billion of money appropriated by the Parliament of Canada.It's important for the public to understand where the financial cycle starts. In fact, it starts here. There are misunderstandings about it.
That's why that right for the Parliamentary Budget Officer to support parliamentarians in committees on the estimates is so critical.
Senator Oh: Mr. Khan, part of my question was already asked by Senator Eaton. In your remarks in the last paragraph you said that your estimate system is badly broken. A bad estimate budget cannot be a good budget.
Can you give some examples? How do you suggest that we fix the estimates system? The F-35 estimated costs are now coming from aviation magazines.
Mr. Khan: I wish Mr. Page was here because that's probably the favourite question he would ever get in his lifetime. He was my boss working in the estimates group at Treasury Board.
We actually provided a full proposal while we were at the parliamentary budget office for foreign investments. Simply put, rather than appropriating money to a department in high-level buckets of Gs and Cs, operating capital, and other descriptive categories, the idea was that parliamentarians would actually look at the program activities within government. It starts at the highest level business lines within the department and those can be broken down into more granular units of activities.
For the Department of Fisheries and Oceans you would recognize the difference between Coast Guard search and rescue and protecting fisheries habitat. They would be descriptive. Parliament would appropriate money on that basis. If departments wanted to move money from one activity to the other, they'd have to tell you about it.
Right now, you put money in at the top of the department for operating capital and Gs and Cs. That money can move around and then you get a report well after the end of the fiscal year of what happened.
How about getting that reporting on a more frequent basis to understand whether things have changed? Is the plan presented to you in reports and plans and priorities now different and on a more frequent basis, so that the program activities actually serve as control gates? The idea is that the control gates become far more detailed, not to such an extent that parliamentary is managing the government, but that parliamentary can discharge its obligations as an overseer. It is more like a board of directors does for a company than the management of the company.
For that, you need robust reporting that is relevant, timely and authoritative that allows you to understand whether it's worth your time to look at more deeply or whether there has been a variance from the plan. Right now, you'd have to dig through the documents to figure out the issue you're interested in such as fighter jet produce procurement. You're not going to find that line in the estimates. The documents won't help you.
It was a very key question that we learned when Kevin and I first got into the PBO role. Parliamentarians want to debate individual issues, but the documents that you get presented are aggregated. The estimates aren' t going to be presented to you in cash as opposed to accrual, but they're also highly aggregated. It's very difficult. We joked about a secret decoder ring to figure out if your issue is somehow buried in those documents in a way that you can extract to make use in your work.
The Chair: There's a time frame, but before we close the chair will recognize one question from Senator Marshall and one question from Senator Woo because, as you can see, there is an interest in this matter.
Senator Marshall: I refer you to section 159 of the Budget Implementation Act. It's much further along than the section on the PBO but it refers to the PBO.
It amends the Federal Courts Act so that the PBO is added to the list of institutions that are no longer considered a federal board, commission or tribunal. As a result, the PBO can no longer refer a question of law or jurisdiction to the Federal Court.
I wanted to know if you were aware of that section, because it's much further along in the legislation. It does put further restriction on the Parliamentary Budget Officer.
Mr. Khan: You are absolutely right. It's actually something we didn't spot right away. It came to our attention later and again, as Justice Harrington noted, the Federal Court in the current legislation remains the court of competent jurisdiction for the PBO, and this would take that away.
Senator Woo: I want to understand point number one of your list of five items that haven't been followed through on. Does the inability to undertake proactive analysis derive only from the fact that parliamentarians are no longer able to initiate requests other than those for which they are considering some kind of action within, or is it elsewhere? I've been looking for it.
Mr. Khan: It's a good question. I think part of it has to do with the lack of clarity with which this legislation has been drafted. Whether it's purposeful or not is not for me to judge. It's for you.
When you look at the fact that the PBO was asked to be given the right to react to specific government documents in the act like the budget and the estimates, as opposed to the nation's finances and the economy. That language goes from the full breadth of the accountabilities parliamentarians and the PBO enjoyed under the current legislation, to something that has a feel that is far more reactive and, frankly, probably controlled.
The powers of the PBO are now set out as reactions to specific documents produced by the government.
The Chair: To the witnesses, if you feel that you want to add to Bill C-44 and the PBO, you can do so by writing to the clerk of the committee, and please feel free to do that. I thank you for your diligent and enlightening comments.
Also, senators, I would remind you that we will have another meeting this evening, starting at 6:45 p.m. in room 9 of the Victoria Building.
(The committee adjourned.)