Summit Article

From the beginning, starting with our first issue in 1998, Summit magazine has tried once a year to identify the big sellers to the federal government. With help from PricewaterhouseCoopers, we've sliced and diced public accounts data any number of ways to try to figure out who's on top.

Mostly, we've found that mining government data is like being green: It ain't easy. Suppliers who would seem to be logical candidates for the list turn out to be missing, or operating under another name, or classified in surprising ways, or … fill in your frustration of choice.

In any event, look below and you'll find we're back again with another report from veteran Ottawa writer Dan Turner, who is nothing if not persistent in these matters. His account of his attempts to crunch numbers is accompanied by our usual sketch of the bestsellers - to be viewed with a level of skepticism consistent with his findings.

Our last venture into these waters has also generated a lengthy response from John Morgan, one of the stewards of Ottawa's data (see Page 5). It rounds out Turner's report in surprising ways.

Dear Editor Parky, (a.k.a. Robert Parkins)

When you assigned me, not once, but twice, to find out why Canada's most comprehensive set of accounting books are flawed, I recoiled. Not once, but twice. In my 25 years as a parliamentary reporter, the Public Accounts of Canada always inspired fear and loathing in my soul. I did everything in my power to avoid the annual lockup in which the Public Accounts were released to reporters half a day ahead of their public release. To be fair, the sandwiches and pastries served to us were both delicious and free, but they were small consolation for being trapped in a room with other reporters every bit as numerically challenged as myself. All of us scratched our heads and pretended to understand the profound implications of long columns of numbers listed under obscure headings.

As my own beleaguered accountant will tell you, I am saddled with what is known in the trade as numerophobia. Example 1: Other people get left and right mixed up; I get debits and credits mixed up. Example 2: In Grade 13 Algebra, I never came up with the right number. I did feel a sneaky pride, however, because my answer was invariably the obverse of the right answer, or the square root of the right answer, or in some way tangential to the right answer. Which, sadly enough, never seemed good enough for the sticklers who teach the subject. Example 4: Once I won a National Newspaper Award for a long and complex story on insider trading on the Toronto Stock Exchange. To this day, I don't understand that story.

By the way, looking back at what I have just written, I note that there is no Example 3. So you see my problem. But I digress.

Editor Parky, just as it is well known that cats are drawn to the laps of cat-hating humans, so does your charming and formidable assistant editor, Anne Phillips, have a knack for seeking out reporters who most abhor phenomena like the Public Accounts of Canada and asking them to write stories about the wretched things. Not once has she done this, I remind you. Twice.

Anne Phillips seems to loathe the Public Accounts as much as I do, but for different reasons. Anne Phillips is herself a small business person. She knows that when individuals and companies file their income tax each year, the government insists on clear evidence that shows what has been paid to whom, and who owes whom what at the end of the year. Very neat. Very tidy. They are sticklers over there at Canada Customs and Revenue Agency, which is the new moniker for Revenue Canada, clearly showing that these people have a much better way with numbers than they do with words. Anne Phillips knows that when you take somebody out for a business lunch, CCRA wants you to be able to say who that somebody was. They don't mind you writing off lunches with clients, but they do mind you writing off lunches with spouses and lovers. No hanky panky.

Now Summit magazine doesn't like hanky panky either. You want to tell your readers who the Government of Canada is doing business with, right down to the last nickel - or, say, right down to the nearest hundred thousand dollars or so. But the Public Accounts of Canada, in all its voluminous majesty, is clumsy in this regard. It seems to do an excellent job at depicting what the government spends in different categories. But as far as depicting which companies are making the most dough from government contracts, the Public Accounts is just as likely to be misleading as it is to hit the nail on the head.

PricewaterhouseCoopers helped us prove last year and this year this very point (believe me, I was grateful for the assistance). PricewaterhouseCoopers did an Access to Information and Privacy (ATIP) request to the Department of National Defence (DND) to determine which defence contractors were paid the most over a given period, in this case the fiscal years 1997-98 and 1998-99.

We found that the Public Accounts of Canada does not reflect reality, at least in terms of what the government pays out to particular companies in particular years. Take Bombardier Inc., the famous little snowmobile company that has grown into an international aerospace and public transit behemoth. The article in Summit December 2000 pointed out that DND's records show that Bombardier sold it $171,222,367.88 worth of goods and services in 1997. But the only listing for Bombardier in the Public Accounts of Canada for that year included payments of $1,645,821 to its Canadair Defence Systems division. The Public Accounts do not list expenditures of $100,000 or less, so there is some wiggle room here. But not $171,222,367.88 minus $1,645,821 = nearly $171 million worth of wiggle room, eh?

So when Summit does its annual ranking of the top 50 suppliers to the federal government, based on the Public Accounts, there is no way of knowing whether the list is a fairly accurate indicator of reality, or not. This is not good for Summit magazine, and, in Anne Phillips' mind, it is not good for the people of Canada.

Well, Editor Parky, you know the rest of the story. Anne Phillips ordered me to meet her in Minto Park this year, beside the statue of some South American general. She told me that we would try again this year to find the mystery behind the "numbers to nowhere" in the Public Accounts.

At which point, I got a lucky break. Poring through the Government of Canada phone book, I found a listing for a man named John Morgan, allegedly the "Director of Government Accounting Policy" for the Treasury Board of Canada. I say "alleged," because given the rate at which public servants abandon old jobs and take up new ones, the Government of Canada phone book is about as accurate an indicator of who is doing what as the Public Accounts are of indicating who is paying what to whom.

However, not only did John Morgan turn out to be the right man, he answered his own phone. When he found out who I was, I believe he may have vowed to himself never to answer his own phone again.

Then John Morgan told me some things. He told me that the Public Accounts does not collect information in all categories. "The Public Accounts are a reflection of the needs of Parliament. We list expenditures in categories, which have built up over the years through legislative requirements, or what some committee may have recommended be listed, that has adopted by the government. We don't collect information on all categories. While we have a lot of detail in there, it is not presented as reflecting everything. It doesn't list all the details of all the cheques issued to John Doe, or any other Canadian … we only list the payments under particular categories. If a company supplied the government under a couple of categories in the accounts and also in categories not listed, not all payments to that company would be listed."

Hmmm. That made me wonder how all those categories that would detail something like $170 million paid out to Bombardier in a year would be missing. I summoned up all I had learned about accounting over many years and pronounced, in an interrogative kind of way:

"So, the Public Accounts doesn't reflect all the government's expenditures?"

"Well, it does reflect overall spending," said John Morgan "The question is the level of detail. In addition to the published, bound copy there are more detailed electronic versions. If you look at Vol. 2, Part 2, you will see in the early pages that we have unpublished material that we can make available in more detail… "

I was getting a bit dizzy at this point, and I could sense that John Morgan was getting uncomfortable talking to me without a public relations person involved. So we agreed that I would send him a copy of last year's Summit article damning the Public Accounts for not being public enough and accountable enough, and he would talk to a PR person, and they would draft a response.

We have published the response as a Letter to the Editor (see Page 5) under the name of John Morgan. The gist of this letter is that I am making unreasonable demands of the Public Accounts (not to mention that I seem to have made a few typos, which, at my age, worries me even more).

Editor Parky, I want you to peruse John Morgan's letter carefully. On the Bombardier issue, John Morgan says:

"In the case of the Summit magazine ATIP request relating to "dispensations" made by the Receiver General on behalf of DND to Bombardier, it appears that the article incorrectly compares contracting numbers or total expenditure numbers to dollars spent per the Public Accounts for Professional and Special Services alone."

Maybe so, Editor Parky. Maybe so. But why isn't that huge chunk of change - $170 million - which represents the gap between what is listed in the Public Accounts under "Professional and Special Services" provided by Bombardier and all those other things Bombardier provided to DND that year, why isn't that huge chunk of change listed somewhere in the Public Accounts?

Or is that just dumb me? Is it possible that the Public Accounts were never meant to be an accurate reflection of what the government pays out to people and companies? After all, John Morgan notes toward the end of his remarks:

"In his Observations on Public Accounts 2000, the Auditor General states that 'the Government of Canada remains a world leader in government-wide financial reporting'."

So, Editor Parky, we're not just up against Treasury Board and Finance. We're up against the Auditor General as well. That's like God, man.

At the end of Year 2, I am still dizzy from all the numbers. I only know one thing for sure. None of this is going to satisfy Anne Phillips. I suggest, perhaps, that she and John Morgan meet with pistols in Major's Hill Park when the noon gun sounds. I will act as Second for both of them. I will count out the steps they take before they wheel and fire. "One, two, four …"