Proceedings of the Standing Committee on
Internal Economy, Budgets and Administration
Issue No. 16 - Evidence - November 23, 2017
OTTAWA, Thursday, November 23, 2017
The Standing Committee on Internal Economy, Budgets and Administration met this day at 8:31 a.m. pursuant to rule 12-7(1), for consideration of financial and administrative matters.
Senator Larry W. Campbell (Chair) in the chair.
[English]
The Chair: Good morning and welcome to the Standing Committee on Internal Economy, Budgets, and Administration. My name is Senator Larry Campbell, and I’m from British Columbia.
I would ask the senators, starting on the right with Senator Batters, to introduce themselves.
Senator Batters: Senator Denise Batters from Saskatchewan. I was pleased to have been named as one of the deputy chairs of this committee yesterday, with Senator Munson.
Senator Tkachuk: Senator Tkachuk from Saskatchewan.
[Translation]
Senator Carignan: Claude Carignan from Quebec.
[English]
Senator Wells: Senator David Wells from Newfoundland and Labrador.
[Translation]
Senator Saint-Germain: Raymonde Saint-Germain from Quebec.
[English]
Senator Tannas: Scott Tannas from Alberta.
Senator Marwah: Sarabjit Marwah from Ontario.
Senator McCoy: Elaine McCoy from Alberta.
[Translation]
Senator Moncion: Lucie Moncion from Ontario.
Senator Verner: Josée Verner from Quebec.
[English]
Senator Mitchell: Grant Mitchell from Alberta.
Senator Plett: Senator Plett from Manitoba.
The Chair: Thank you. This is my first meeting as chair of this committee. I’d like to say a few words before we start.
First of all, I would like to acknowledge the work of Senator Leo Housakos. I’ve been on the committee for a number of years when Senator Housakos was chair. He had an incredible sense of commitment, decorum and common sense. I’m hoping that I will be able to emulate that. He has helped this committee and the Senate move forward. We had some times of strife, and we’ve been working our way through that. Through his leadership, the Senate is a better place.
I’d also like to acknowledge Nicole Proulx, who for many years was the CCSO here and is now the clerk, and her replacement, Pascale Legault, who is the new CCSO. None of this would happen without the staff that we have behind the scenes. All too often we forget that there are people behind us who make sure, for instance, that I have a script, that my binder is here and that everything is working.
Last but not least, I’d like to acknowledge the work of the senators. This is a very busy and large committee. Without the work of senators from all sides, this would not be able to go forward.
I’d like to move to Item No. 1 on our agenda, adoption of the minutes of the proceedings of October 26, 2017. Do I have a motion? Senator Wells.
All in favour?
Hon. Senators: Agreed.
The Chair: Opposed?
Carried.
Next we have a report on International and Interparliamentary Affairs activities. We have witnesses Colette Labrecque-Riel and Danielle Labonté. Please go ahead.
[Translation]
Colette Labrecque-Riel, Clerk Assistant and Director General, International and Interparliamentary Affairs: Thank you. Daniel and I are here to present the annual report on the parliamentary associations’ activities and expenditures. At the end of each year, a fiscal year, it is customary to present to the boards of the House of Commons and the Senate a report on the fiscal year and the activities and expenditures of the 13 parliamentary associations.
[English]
To begin with, I wanted to give you a very short presentation of the actual annual report in terms of expenditures and activities. I would certainly be happy to take questions if there are any.
As senators will know, senators operate in the Senate Chamber and on committees, but senators also do a lot of important work in terms of international and parliamentary diplomacy. That work is carried out through the 13 associations.
This annual report is presented as a very short and high-level overview of all the work that was conducted in the 2016-17 fiscal year. In terms of how that year compared to previous years for expenditures and activities, I can say that in the last five fiscal years, last year was the most active. In terms of activities, the 13 associations carried out 83 outgoing missions, if you like, 71 internationally and 12 here in Canada but outside Ottawa.
In terms of the number of participants in those activities, we also had a significantly high level as compared to the four previous fiscal years, with 349 participants. That would have been comprised of 87 senators, 186 members of Parliament and 76 staffers.
In terms of actual expenditures for that last fiscal year, the total budget for parliamentary associations amounted to a little over $3.5 million. Expenditures on activities themselves amounted to a little over $2.1 million, while contributions — and people would understand those as being membership fees that Canada has to pay to belong to international multilateral associations — amounted to $1.3 million. In terms of total expenditures compared to the budget, this represented a 98 per cent utilization rate of the budget, leaving a surplus funding of only $81,000.
In terms of the types of expenditures that associations encounter while conducting their work, the biggest item tends to be transportation, given that the geographic location of Canada means we often need to fly to our destinations to conduct the work of international associations. So transportation is the biggest item, followed by accommodations.
The report does provide an overview of each association’s allocated budget and actual expenditures. The first section of the report provides a high-level explanation of the governance. These 13 associations are governed by what is referred to as the Joint Interparliamentary Council, or JIC, comprised of members of the Senate and the House of Commons, this being a joint venture between the two houses.
Finally, in terms of destinations, the 13 associations did travel. As I mentioned, 71 outgoing international missions were conducted in the last fiscal year. Canadian parliamentarians travelled to 35 different countries, and they welcomed 41 delegations here in Canada.
This concludes my presentation, and I’m prepared to take questions if there are any.
[Translation]
Senator Saint-Germain: Thank you for your presentation. I apologize for not carefully reading the 77-page document that I received at 8:29 p.m. last night, but this is a very interesting and very important document. So I have a question, to be followed by a comment. My question is the following. In leafing through the report, I noticed a lot of quantitative data, including budget information. Does the report include a qualitative analysis of the impacts — for Canada and for the Senate — of the travel abroad? Further, for each official mission, is there a report that is not only quantitative but that also details the impacts and further action?
Ms. Labrecque-Riel: Thank you, senator. The report is factual, and it is prepared for administrative purposes. The report is presented to the Joint Interparliamentary Council to be reviewed and adopted. As to qualitative information, however, the report does not indicate the value of each of the missions.
That being said, when the parliamentary associations embark on missions abroad, they must report to both chambers on their missions, indicating the mission objectives and the names of the delegates. These individual reports provide financial data on that specific activity. So that is presented separately for each activity.
[English]
Senator Tkachuk: I have a question on the IPU numbers. I notice that the IPU contribution was $419,697. How does that compare? It has been a struggle to try to keep that in line. Have they made any progress in the last number of years? Give me the last three or four years.
Ms. Labrecque-Riel: Yes, senator. A presentation is made by the Chair of the IPU before the Joint Interparliamentary Council. In order for the associations to obtain their budgetary allocation, they do prepare presentations to the JIC in terms of their plans, activities and requested budgets. The chair did report back that the contributions for the IPU are significant, and there’s a history behind that level of contribution.
The contribution itself has decreased slightly. However, Canada is billed in Swiss francs for that particular multilateral association. The contribution in Swiss francs has decreased slightly. However, because of the exchange rate, the amount in Canadian dollars hasn’t budged very much. I don’t have the actual percentages over the years, but on page 30 there is a graph that will show the fluctuation in that contribution over the last five years.
Senator Tkachuk: I can do this myself, I guess.
Ms. Labrecque-Riel: I could get you that detailed information, if you like.
Senator Tkachuk: Yes. There should be some way for us to compare apples to apples, even though there is a fluctuation in currency. I would like that.
Ms. Labrecque-Riel: I will get you that information to you, senator.
Senator Tkachuk: Thank you.
The Chair: Are there any other questions?
Senator Batters: I have a quick one, just because of how the colour is printed out. On page 8 of 51, in figure 3, the percentage of the activity expenditures by type, the colours used on that graph for transportation and miscellaneous are almost identical on my picture. The miscellaneous is only 2 per cent and the transportation is the 59 per cent; correct?
Ms. Labrecque-Riel: Sorry, I couldn’t hear.
Senator Batters: In figure 3, page 8 of 51, the colour blue that’s being used in that graph for transportation and miscellaneous is almost identical. Transportation is the 59 per cent on that graph and miscellaneous is 2 per cent; correct?
Ms. Labrecque-Riel: The colour coding, yes. Transport is 59, yes, and miscellaneous is 2 per cent.
Senator Batters: I just wanted that clear for the record because they look identical. Thank you.
The Chair: Any other questions?
[Translation]
Senator Saint-Germain: I would like to move that the report not be adopted today so that we can examine it at the next meeting.
[English]
I would like to move a motion that this report is studied at the next meeting and then that we vote on it.
The Chair: This report is actually for information only.
Senator Saint-Germain: It’s only for information?
The Chair: That’s my understanding. We can defer it to the next meeting and explore it further, if you like. I agree; it was very late.
Senator Saint-Germain: Other colleagues and I may have other questions, so I would suggest that we defer the examination of the report to the next meeting.
The Chair: Colleagues? Is everybody okay with that?
Hon. Senators: Agreed.
The Chair: We’ll defer this report to the next meeting so we can ask questions. Thank you very much.
Ms. Labrecque-Riel: Thank you.
The Chair: Number 3, report of the Subcommittee on the Senate Estimates, oversight and audit. Senator Wells.
Senator Wells: Thank you very much, chair.
Colleagues, you will recall that about a month ago I was presenting the fifth report from the Subcommittee on the Senate Estimates and the meeting ended, so this is a continuation of that. I know there’s a list of questions, but what I’d like to do is give a five-minute overview of where we reached up to that point.
Colleagues, first I want to mention again the members of the subcommittee, to re-familiarize. I was chair, Senator Jaffer was deputy chair; Senator Campbell, Senator Tkachuk, Senator Saint-Germain and Senator Cordy were all members. We had assistance from our clerk, Dan Charbonneau.
Colleagues, the subcommittee looked at the recommendations of the Auditor General’s report, paragraphs 51 to 57. There were 22 recommendations. We looked at seven recommendations related to the establishment of an audit and oversight committee. Among his recommendations would be for the Senate to create an oversight body whose membership would be composed of senators and non-senators, including the chair; the position of internal auditor be created and report directly to the oversight body. Its mandate would assist in interpreting the rules, policies, guidelines of expenses and the ability to review expenses, the authority to make final decisions on the legitimacy of expenses, and to hire and terminate an internal auditor. The oversight body should be open to the public and all reports, minutes and decisions should also be published on the Senate’s website.
There were some others, including one I wanted to note because we did have some discussion that the Auditor General of Canada be given the role of external auditor to the Senate.
The subcommittee studied all of these recommendations in great detail and we had a number of witnesses come in. Subsequent to that, I also spoke with the principal clerk of the U.K. oversight body, which is called IPSA, the Independent Parliamentary Standards Authority. I also had a lengthy conversation with their chief executive officer, Mr. Marcial Boo — the principal clerk was Matthew Hamlyn — and I’ve also spoken with former Minister of Finance in Newfoundland and Labrador where they do have external members on their oversight committee — the only two in the Commonwealth. There were other countries that we used in our investigative model to consider the question of independent people sitting on a parliamentary committee. I’ll talk about some of their comments without attributing specific comments to any of them because the conversations weren’t part of the official discussion at our subcommittee.
The oversight body, whether it was the IPSA or our proposed oversight body, should be answerable to the highest authority, and the highest authority in our case, colleagues, is the Senate. They do travel claim sampling to see if processes are being followed. They also do specific travel claim sampling to see if the MPs are aware of the rules and to see if there are any outliers.
The presence of the IPSA all but eliminated the public discussion that the U.K. had a number of years ago on some of their expense issues. Their comment was, if you’re transparent and everything is published on the website — I looked at the IPSA website and I would encourage colleagues to do the same — you’ll see that they publish almost as much as we already do. I’ll go to some of the things the Senate has done in the last number of years, colleagues.
I don’t know if you have the infographic that is being handed out now, but it was handed out at the last CIBA meeting that we addressed this. You’ll see along the bottom line, colleagues, from 2009 to current, all the things the Senate has done to increase its accountability and transparency and to give the public confidence that their money is being responsibly spent.
Not the least of which, and I think the most important, there is the full publication of all senators’ expenses on the Web. We don’t just have a committee looking at these expenses; we have 35 million Canadians and others around the world, if they wish to do so. I think was an excellent move by this committee last year.
He did say that because the information is so public and scrutinized so much, their information is now boring and there’s no public uptake whatsoever in any of this. Of course, it’s self-regulating as well. When things are published, you tend to regulate yourself accordingly.
Their group, the IPSA, meets in public to take evidence and meet in camera to deliberate, which I think would be a good model for the proposed committee.
In addition to the U.K. bodies, the IPSA has partnerships in Scotland, Wales and Northern Ireland. We also looked at Australia, New Zealand and the G7, as well as all legislatures in Canada.
Colleagues, I think it’s very important to note that the Auditor General looked at a very small portion. On Thursday, June 6, 2013, at that sitting, it was moved that “the Auditor General of Canada . . . conduct a comprehensive audit of Senate expenses, including senators’ expenses.” All he did, colleagues, was look at senators’ expenses. He did not look at Senate expenses in the whole.
The Subcommittee on the Senate Estimates is recommending that an audit and oversight committee be struck to look at all Senate expenses, including senators’ expenses, in a sampling with methodology, and to do deep dives, where required, on specific elements of the Senate in total.
We have a $103 million budget. You’ll see in the pie chart that the Auditor General looked at a very small slice. In fact, you’ll see 13 per cent for senators’ staff and salaries. No comment or observations were made whatsoever on staff salaries. It was 8 per cent, plus 2, plus 2, so 12 per cent of the total Senate budget was reviewed by the Auditor General, which cost $24.3 million. We’re proposing that a committee named the “Audit and Oversight Committee” be struck to look at the total Senate budget and not just senators’ expense budgets.
Colleagues, I’m pleased to continue taking questions.
The Chair: Thank you, Senator Wells.
First up is Senator Tkachuk, but he’s a little busy right now.
Senator Saint-Germain.
Senator Saint-Germain: I don’t have any more questions. All mine have been answered.
The Chair: Senator Mitchell.
Senator Mitchell: I asked my questions already.
The Chair: Senator McCoy.
Senator McCoy: Congratulations to Senator Wells and the committee. I think the proposal is shaping up very well. I take it that there are still quite a few details to be worked through. I don’t see a full outline of a mandate, for example.
Senator Wells: One of the recommendations, Senator McCoy, is to send this to our Rules Committee to help develop the mandate.
Senator McCoy: I have some long-standing comments on that and also a comment on the budget.
For several years now, several of us have been commenting on the lack of a sophisticated due process system for this side of the Senate’s operations, the expense side. I think the ethics side introduced a due process system some years ago that improved our processes, including rules of natural justice. We’ve taken some steps on this side but not totally. Recommendations have been made by several senators on and off the record to improve those. I don’t see any reference to that in here, but the shape of that will be partly dependent on what the mandate of this committee is and what the mandate of the Internal Economy Committee continues to be, where the line is drawn.
I don’t need an answer to that, but I do want it on record that I don’t see it addressed here and I think it does need to be addressed. I think we need to raise it in the future at the appropriate time, and sooner rather than later would be an appropriate time.
Senator Wells: Senator McCoy, you’re absolutely right. One of the models we used — we deliberated quite a bit about this and it’s noted in our transcripts — was that the proposed audit and oversight committee would be structured exactly as the Committee on Ethics and Conflict of Interest for Senators is structured.
Senator McCoy: I saw that and I understand that, but it depends on the mandate of the audit committee.
Senator Wells: Yes.
Senator McCoy: That’s why I’m focusing in on that. I noted that. Notwithstanding that, my comment holds.
Senator Wells: I understand and I agree with you.
One thing that’s important not so much for the governance but for the operational governance of the proposed committee is that it shouldn’t be restricted by any other body other than the body to which it reports.
Senator McCoy: Let me put it this way to make it practical. At the moment, for example, a senator claims an expense — and usually it comes down to claiming an expense — and somebody in the Senate administration, some staff member, says, “I don’t think that quite fits the rules.” The senator’s staff says, “Yes, it does.” Then the Senate administration staff says, “No, it doesn’t.” A staff member in the senator’s office then goes to the senator and says, “Yes, it does.” Then the senator storms off to the steering committee and says, “Yes, it does,” and the steering committee spends a good deal of its time deciding such things as saying yes or no; it does or it doesn’t.
I have not been part of those decisions, but I’m told that an inordinate amount of Internal steering committee time has been brokering those differences of opinion as to the interpretation of the rules, which has always struck me as being an inefficient use of our time. We aren’t triaging our time well, and it does put our professional staff in Senate administration in a very difficult position. First of all, they’re being asked to police; then they’re being asked, in a sense, to prosecute by bringing these things forward and putting the information in front of a judge, which at that stage becomes the steering committee.
All along, there’s not a lot of due process built into that. I think that whole area can do with a bit more thought on how we develop a system that is efficient and fair to both staff and senators. It’s more about the daily operation stuff than it is, I imagine, what this audit oversight committee is going to look at. I like the idea of audits and of random audits on all senators.
I like the idea of audits, which we have always done anyway on our overall operations. All of that is very good. As far as how this has been driven, it is excellent, but I think some areas still need to be finessed.
Senator Wells: Thank you.
May I comment on that before we go on to the next question?
The Chair: Certainly.
Senator Wells: There is a lot of mythology around the steering committee. I have sat on it for the last two years. I don’t think we spent an inordinate amount of time reviewing expense reports. We may have done that once every two months. There would be a question and we would make a decision and not spend a lot of time deliberating. But the mythology still surrounds it, just like the mythology still surrounds this committee, which is still called a highly powerful and secretive committee with the cameras on us.
I do want to dispel the thought that the subcommittee of this committee, the Subcommittee on Agenda and Procedure, spends an inordinate amount of time.
We did have as one of our witnesses Mr. Andrew Newman, our external auditor from KPMG. He said in his testimony that he attends over 100 audit committee meetings per year. They are all for public-type bodies like school boards and utilities; none for private companies. He said that in a role such as this, you would be playing an oversight role to make sure the decisions the entity makes have the appropriate rigour and diligence.
We have a highly trained and highly professional staff, both political and administrative, that do this as their living. We have revamped the rules completely and we have put it all online.
So I think a lot of the things that this proposed committee would look at would relate to the diligence and rigour we have in place to make sure that is being done and not look at individual expenses. I wouldn’t want to be part of a committee that did that.
Senator McCoy: Draw the line at that point, but I think we need a further conversation on the operational side and where the line is drawn between the two, the oversight and the operational. We don’t need to take up more of our time here.
I have a further question on the budget for this. It’s said to cost less than $500,000 a year. I apologize; I was unable to be at the last meeting. Perhaps you covered this point then, but if not, could you identify why would we be spending that amount of money? What is it based on? Also, are we going to be reallocating existing resources or is this newfound resources?
Senator Wells: Thank you for your question, Senator McCoy. For that $500,000, there would be the chair and the deputy chair.
Senator McCoy: That’s what, $17,000?
Senator Wells: It would be $17,800. There would be per diems for those we bring in as witnesses and people that assist the committee. That would be just a small amount budgeted at $10,000.
The rest would be internal audit fees. Right now the Senate doesn’t have an internal audit function or an internal auditor. In our experience and in discussing with Pascale, who has far greater experience than I , a typical amount — we didn’t call it just an internal auditor; we called it an internal audit function, because it would be an internal auditor plus the team of people that that person has. That would be the largest part of the $500,000.
The other thing, Senator McCoy and colleagues, is that we don’t know where any deep dive will take us. It may be necessary to expend more after the report is made of any deep dive. So there could be further costs based on what we find. But it could be simply this, and we say less than $500,000.
As to the other question you ask, for the rest of the year, if this committee is struck before Christmas, let’s say, then there would be one quarter of the year left. That amount would be $125,000.
Last year, you’ll recall that when I was Chair of the Subcommittee on Estimates we looked at the budgets and budgeted, I believe, $400,000 for an internal audit function.
I look to Pascale for confirmation of that number. Something like that?
Pascale Legault, Clerk of the Committee: A little less than that.
Senator Wells: That money was not expended. We still have that money sitting in our Senate budget to the amount of probably $125,000 or $150,000. So we do have enough within our existing budget to transfer money over to this internal audit function. It really wouldn’t be a transfer; it would just be assigning it to a function that has already been approved by the Senate.
The estimates haven’t been presented yet, so for next year it would be part of the estimates.
Senator McCoy: Thank you.
Senator Tkachuk: On your form here, and I think we have talked about this before, I just want to make it clear that the meetings of the Internal Economy Committee were opened in 2010-11. They were open to the public and the press. We did have in camera meetings, as we do now, when we discuss personnel, private matters, audits, but the meetings were open and the press was invited to come. It didn’t take them long to get bored, but nonetheless they were there. And the Joint Interparliamentary Council meetings were also opened up for the first time.
The reason I say that, not only because I was chair at the time, but also because the House of Commons is making such a big deal that they are opening up their board meetings. The Senate opened up their board meetings six years before them and have been open, as well as the Joint Interparliamentary Council meetings, which are also secret meetings. They were also opened up on all money matters.
Senator Wells: Congratulations, as chair at the time, to lead that.
Senator Tkachuk: Thank you.
The Chair: I’m going to emulate Senator Tkachuk also. I’m going to be channelling a lot of previous chairs as I move forward here.
Senator Moncion: I’m new to this committee, but not new to internal audit. I will make my comments in French.
[Translation]
The difference between the terms “oversight” and “operational” is extremely important in internal audit. We must remember that the committee members are not responsible for auditing the expenditures, but rather for ensuring that the expenditures are monitored overall.
You talked about a person responsible for internal audit. If that person has a very clear mandate, they could produce very specific reports on what should be audited and what should be monitored. The role of the audit committee is to ensure that the control mechanisms are relevant, which means that the audit committee must see make sure that controls are implemented to ensure that the rules are followed. An accountability and management process must be implemented. Then, we must ensure that all policies in effect at the Senate are in compliance.
When you talk about reviewing expenses and verifying what each senator spent, if that approach is consistent with the rules, then that should not be the committee’s role, but rather that of the internal auditor. These reports should be produced with recommendations. I am afraid that the committee could be too closely involved and would not have enough perspective to gain an overview of the work being done.
I have a lot of caveats about how far we want to go in this audit work. We must remember that the responsibility for the results will ultimately fall on the shoulders of the five persons chosen to serve on that committee. In my opinion, it is a much broader mandate that involves the personal responsibility of each senator, of each member of this committee. They will have to explain why they did not notice one thing or another. That is why the tasks must be divided to ensure that the audit committee does the work of an audit committee. It will be very important for the internal auditor to do an internal audit on an ongoing basis. Those are the rules. If we want to protect ourselves as a group, there have to be some rules.
[English]
Senator Wells: Thank you, Senator Moncion. I appreciate your knowledge and your history in this.
There should be a clear division of tasks, I agree. I also go back to the comment that our external auditor, Mr. Newman, made when he said, “You’re playing an oversight role to make sure the decisions the entity makes have the appropriate rigour and diligence.”
I don’t foresee this committee, if it is struck, would be looking at expense reports. That would be within their mandate but well outside their job.
It’s the integrity of the system. At $103 million and possibly rising in the next fiscal year, you can’t look at every expense. You can do deep dives on specific things or if you hear rumblings about a certain something. Senator Marwah, in a previous meeting, said perhaps in six months we could look at the HR Directorate’s revamp, and that could be a deep-dive task of the committee as one of the suites of things that they do.
I agree with you, Senator Moncion: It’s the integrity of the system that is in place. It’s the system that carries it.
[Translation]
Senator Verner: I am a new member of the committee. Following the remarks of my colleague Senator Moncion, I want to make sure I understand this correctly. The audit committee will be made up of senators only?
[English]
Senator Wells: That is correct. That’s the recommendation.
[Translation]
Senator Verner: Okay. I do not want to repeat the discussions you have probably had, but in order to avoid the public perception that we are regulating ourselves voluntarily and self-monitoring, I do think it is a good idea to divide up the tasks properly as a safeguard against being accused of being judge and jury at the same time.
[English]
Senator Wells: Thank you, Senator Verner. We spent a lot of time talking about the question of outside independence. I may pass it back to Senator Tannas, who was the biggest proponent of the necessity of having independent members on the subcommittee.
We came to the conclusion that the full transparency of our meetings, of any witnesses that we have in and the fact that everything is published online, our reports are made to the highest governing authority. And any report tabled in the Senate is, of course, not a private report; it’s a public report. That’s why we table it.
At this point, I will send it to Senator Tannas, who came 180 degrees from it being necessary, as you and Senator Mitchell have suggested, of having non-senators on a parliamentary committee.
Senator Tannas: For me, I went into the process thinking it was absolutely necessary that we have outside people combined with senators. Looking at it from a practical point of view but also a responsibility point of view, us looking to somebody from the outside to sanctify what we ought to be doing in the end, I came to agree that that’s one step too far. We should be taking responsibility. The issue of the public trust is there. It’s a reality.
What brought me on was that we would just make everything 100 per cent public. Traditionally in a company, the audit committee will meet. There will be an in camera session. There are a lot of things that get done before the report gets baked. The auditors have a report where they tattle a little bit on management and this and that, and management responds, et cetera. None of that makes the record of the company.
In our case, all of that will be done in public. If the auditors have something to say about management not getting something done or rules not being followed from internal audit reports, et cetera, everything will be public. There is nothing wrong with that. If we do that, then in effect the audit committee has 35 million independent members.
Senator Batters: I want to make a brief comment.
Senator Wells, as I mentioned last time, the Auditor General’s massive cost was actually $27 million, not $23.6. I just point that out again because you indicated that in your opening comment. I wanted to make sure the Canadian public is well aware of just how expensive it was.
Senator Wells: Thank you, Senator Batters. I look to Pascale because I have had excellent help from Pascale on a lot of the data I put in.
Can you tell us why the $23.6 million differs from what Senator Batters has suggested?
Ms. Legault: The $23.6 million was the amount communicated at the time, because they had the actual cost plus the estimated cost to finish the audit. This is the amount that we have been using, because this was communicated at the time of the report.
Senator Batters: That was the amount that came out in June 2015, but then there were additional costs. It was widely reported after, when they actually came up with their full costs later on, that it was $27 million.
Senator Wells: I agree with you, Senator Batters. We know it’s higher than $23.6. I couldn’t commit to that on paper, but we do know it’s higher.
As a reminder to colleagues and all those who are listening, the amount required to be repaid was about $300,000 out of the Auditor General’s efforts.
[Translation]
Senator Carignan: I would like to commend those who have served on this committee and this subcommittee and I salute their important work.
I completely agree with Senator Moncion regarding the description of the audit committee and its role. I think you have fully described what this subcommittee should be, and I completely agree with you. I hope that everyone shares this view of what an audit committee should be.
We have been through some extremely difficult times, and this is probably the last big piece of the puzzle in transforming the entire administration of the Senate. The scandal that rocked us in recent years is probably related to this important piece, that is, internal audit, being missing. There was a person considered an internal auditor. I do not want to be critical, but obviously she did not understand her role, nor did her superiors. Her status was fragile and she was completely subordinate to the clerk. Her instructions came primarily from the clerk, and her job was to conduct a witch hunt to try to find something in the details of certain expenses. She was so busy chasing the mouse that she could not see the elephant. So in order to avoid that kind of situation, I think we should create a subcommittee on audit along with a description of its duties, as Senator Moncion so brilliantly described.
[English]
Senator Mitchell: I would like to reiterate a comment I made in the last meeting we had, but that was a different configuration of committees. I would like to begin by seconding Senator Verner’s comments with respect to external membership on the committee.
I will preface all of that by saying the work done by the subcommittee is outstanding and very thoughtful. The process, as established, and the consideration that you have given are laudatory. However, I feel that we are missing something ultimately very important, which would be afforded by external representation on this board. It is a question of credibility. A lot of the reason we’re doing what we’re doing is to re-establish and strengthen our credibility. I think there is a risk that we look self-serving if we manage this process entirely ourselves.
Perception isn’t everything, nor should we just be driven by perception. However, I also think there are pragmatic, practical implications of this. That is, we are an organization under tremendous pressure, and forces are pushing us. At eleven o’clock on June 15 or December 15, we know it is very easy to begin to lose perspective. Many of us in this room have been through the difficulties we have had, and others won’t in the future. I think it’s very important to keep perspective, an outward-looking consideration of what the public view is, and sometimes it’s difficult to sustain that.
We could get external advisers, I would say at least two, on this board of five. They would offer us a perspective that we might not have over time, as I say, given the context within which we work.
There are two arguments I have seen that have been expressed against that. One is cost. There is going to be a cost to the arrangement that’s been proposed, and that cost won’t differ if we have two external people.
The second one is the question of autonomy. We receive advice from many individuals, commissioners and so on, but ultimately we are responsible. This committee can only essentially make recommendations ourselves, and we can be overruled or otherwise by the Senate itself.
The audit oversight body we are discussing, if it had two external representatives on it, they wouldn’t be telling us what to do. They would give us recommendations. They would not erode our autonomy any more than the Ethics Officer erodes our autonomy.
I think there is an advantage to that. I have reiterated it, and I’ll leave it at that.
Senator Wells: I would caution to get caught up in that type of detail. There will be external advisers to the committee. The committee will hire an internal auditor who will conduct the internal audit function, make his recommendations and give his evidence to the committee, and that will be public. The Senate already has an external auditor who will be an adviser to this committee. He will receive his mandate from this committee, and that will be delivered to the Senate.
The structure may not be exactly what you have proposed, but the elements of the structure are there. It won’t be just an internal auditor and the function that person carries out, or the external auditor. There will be an opportunity for many people to contribute to this, and most of them will not be senators. At the end of the day, whether there are internals and externals on this committee, it has to go to the Senate, which means all senators.
Senator Plett: Senator Wells picked up on one of the comments I was going to make. I want to add my voice to what Senator Batters said.
First of all, we had an external auditor who cost $27 million to collect $300,000. That is not tremendously efficient in getting somebody from the outside.
However, my comment is not that. My comment is that if we know the cost is $27 million, I’m a little concerned about us printing documents that say it’s almost 20 per cent less than that. I’m not sure when we realized it was 20 per cent more than what this document is showing, but I don’t think we should be sending out documents that are out by almost 20 per cent and say we’re doing a good job. Let’s make sure we have our numbers right.
The Chair: Senator, perhaps I could address that. Apparently the figure of $23.4 million is the figure that is still on the website.
Senator Plett: Then that, chair, should also be removed.
The Chair: I’ll work on that, Senator Plett. Thank you.
Senator McCoy: My comment is exactly the same as Senator Plett’s and Senator Batters’, who brought it to our attention. If Senator Batters says that it can be verified that $27-some-million is the correct number, then we should use that. To start our audit oversight committee with inaccurate financial information I think would be a bad omen.
The Chair: Are there any other questions? Motion?
Senator Wells: I move that the fifth report of the Senate Estimates Subcommittee be adopted and that the chair be authorized to report its contents to the Senate for the purpose of adopting Recommendations 1, 2 and 4, which are outside the current mandate of Internal Economy, CIBA.
The Chair: Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
The Chair: All those against? The “yeas” have it.
Again, thank you very much for your hard work, Senator Wells. It’s much appreciated.
Senator Mitchell: Given this is the first vote that we have had with the new structure, I would like to say that I’m ex officio. I don’t have an exercise on the vote. That’s why I didn’t vote.
The Chair: But your contribution is more than noted, Senator Mitchell.
Senator Mitchell: Just for the record.
The Chair: Item 4 on our agenda is membership of the Subcommittee on the Senate Estimates. We have to reconstitute this committee because the time constraints are coming up for our budget.
Senator Munson: I move that the following senators be named as members of the Subcommittee on Senate Estimates: the Honourable Senator Jaffer, the Honourable Senator Moncion, the Honourable Senator Saint-Germain, the Honourable Senator Tannas and the Honourable Senator Tkachuk.
The Chair: Any questions? All those in favour of this motion?
Hon. Senators: Agreed.
The Chair: Nays? The motion passes.
Next is the fifth report of the Subcommittee on Agenda and Procedure.
Honourable senators, pursuant to the order of this committee, the Subcommittee on Agenda and Procedure is authorized to make decisions when the committee is not able to meet. It has an obligation to report at the first available time. It’s my honour to table the fifth report of the subcommittee, which deals with decisions taken by the subcommittee on October 24, 2017 and October 31, 2017. This report is placed before you for your information.
Are there any questions? Thank you.
Next is Item No. 6. Honourable senators, with the adoption of the Senator’s Office Management Policy on April 13, 2017, the Subcommittee on Agenda and Procedure was authorized by the committee to clarify and determine any ambiguous, uncertain or challenged interpretation of any part of the policy, as necessary, and to report its decisions.
It is my honour to table the sixth report of the subcommittee, which deals with the changes to the policy. This report is placed before you for your information.
Are there any questions? Thank you.
We will now be moving in camera. Before we do, I would like to acknowledge Senator Munson, from Ontario, deputy chair. Thank you for being here. We missed you on the first round. We will now go in camera.
(The committee continued in camera.)