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Status reports are particularly important because they show what departments and agencies have done to address recommendations from a selection of our past audits. In determining whether progress is satisfactory or unsatisfactory, we take into account the complexity of the issue and the amount of time that has passed since the original audit.
Madam Chair, I thought I would take a few minutes to present your committee with a brief overview of each chapter in the report. My colleagues and I would be glad to elaborate on any of the chapters that may be of particular interest to committee members.
Let me begin with the areas where progress has been satisfactory. I'll begin with the management of advertising and public opinion research.
Given the serious weaknesses that we identified in our 2003 audit of government advertising activities, this year's findings are good news. We found that Public Works and Government Services Canada has made satisfactory progress in ensuring that advertising and public opinion research contracts are awarded in a fair and transparent manner. It used a competitive process to establish a pool of qualified firms that can provide advertising and public opinion research services. The process for choosing the agency of record was fair and transparent. Departments have made satisfactory progress in ensuring that they plan for advertising activities and manage suppliers in accordance with the communications policy of the Government of Canada.
I am pleased that the government did not create new rules and controls in response to our previous report. Instead, it focused on following the rules that were already in place.
[Translation]
There was also progress in the area of international taxation. The globalization of the economy and growth in international investment have a significant impact on the taxes owed to Canada. This affects Canadian residents doing business abroad as well as non-residents earning income in Canada.
The use of tax havens by Canadians and abuse of tax treaties with other countries could divert tax away from Canada, and the amounts at risk could be significant. For example, the Canada Revenue Agency estimates that in 2005, Canadian corporations conducted $1.5 trillion in transactions with related parties in foreign countries. Non-residents paid over $4.9 billion in taxes last year of income earned in Canada.
We found that the agency is now better able to identify potential non-compliance with the tax rules on international transactions. It has taken steps to detect aggressive international tax planning schemes and has directed more resources to auditing international tax avoidance.
However, in some of the tax offices handling the highest risk files, the agency still lacks sufficient expertise in international tax auditing. Taking into account the difficulty of retaining sufficient expertise, the agency needs to develop a consistent national approach to auditing taxpayers with international transactions.
[English]
Another area in which globalization has a significant impact is passport services. In 2005 we reported that the passport office, now Passport Canada, was struggling to meet higher expectations for security and growing demands for service. Since then, it has dealt with an unprecedented demand, issuing over three million passports in 2005-06. High demand pressures will continue, given the more stringent U.S. requirements for passports. The agency has clearly directed a major effort toward resolving the problems that we had identified in 2005. For example, examiners now have appropriate tools and training to determine whether identity documents provided with passport applications are authentic. Passport Canada has also significantly enlarged its watch list and has used the information to refuse applications or to investigate them further.
Passport Canada still has some major issues to resolve, particularly in the areas of security and identity verification. It will need the full cooperation of other government organizations at the federal, provincial, and territorial levels.
[Translation]
We also examined the progress made by the National Research Council Canada (NRC) in its management of leading-edge research. The NRC is the federal government's largest research organization. I am pleased with the progress it has made toward implementing the recommendations from our audit in 2004.
The government appointed council that governs the NRC's operations has strengthened its role, and the NRC's research institutes have taken steps to improve the way they manage research projects. We also noted satisfactory progress in several human resources management initiatives.
But action on some of our recommendations was delayed while the NRC laid the foundation for its new corporate strategy. It is important now that the organization meet its own milestones so it can fully address our recommendations.
[English]
Moving on to the conservation of federal built heritage—that is, historic buildings, battlegrounds, forts, and so on—I am pleased that Parks Canada has made satisfactory progress in addressing the concerns we raised in 2003 on the need for better protection of our built heritage. The agency has proposed a policy to strengthen the legal protection of federal built heritage and has improved its management tools.
Nevertheless, not all the problems have been resolved. The fate of heritage sites and buildings in the custody of federal organizations other than Parks Canada remains uncertain. The loss of heritage buildings and sites means that future generations will no longer have access to significant aspects of our history. It is therefore important that the federal government strengthen its conservation regime for built heritage. It also needs to set priorities to decide which heritage buildings and sites should be preserved.
[Translation]
Now, let me turn to the two areas where we found unsatisfactory progress in implementing recommendations from previous reports. In those two areas, the problems are long standing.
Let's start with the management of the social insurance number, which is used to issue billions of dollars in federal benefits to Canadians. Please note that Ms. Fraser refers to billions not millions. It is also used widely outside the federal government. Even though Human Resources and Social Development Canada has improved several aspects of its management of the social insurance number, two important issues, first reported nine years ago, remain unresolved.
First, the department cannot be sure of the quality of the information it retains in social insurance register, the data base of personal information provided by everyone who has been issued a social insurance number. The department does not have goals for the quality of the information and does not measure it systematically.
Second, the policies on how federal departments may use the social insurance number are still unclear. This has led to inconsistent interpretations of the rules, which makes it difficult for the departments to be sure they use it appropriately.
This is the fourth time since 1998 that we've reported these two problems. The government should have resolved them by now. Good management of the social insurance number—including clear guidance on its use in the federal government—is more important than ever, in light of security concerns and the growing incidents of identity theft and fraud.
[English]
The other unsatisfactory area is the management of the coast guard fleet and marine navigational services. I am concerned that the coast guard has not solved long-standing management problems. It has not responded adequately to recommendations made a number of years ago, and many of the problems cited in our report are similar to those raised in a 1983 audit.
The coast guard still operates largely as five regional coast guards, each with its own way of doing things. It has not become the strong national institution the government expects it to be.
Also, Canadian mariners, like others around the world, rely more and more on electronic navigation. While the coast guard is introducing new marine navigation services, it has been unable to develop strategies for traditional aids, such as buoys and light stations, that are costly to maintain and operate, and that no longer serve their original purpose.
The coast guard has a history of failing to complete initiatives, partly because it takes on too much at once. It needs to decide on a few of the most urgent priorities and then get the job done.
[Translation]
In conclusion, audit by nature focuses on areas in need of improvement. I am very pleased to see that our work made a difference. This Status Report shows that the government has taken satisfactory action in the majority of the areas we revisited this year.
[English]
Success can be attributed mostly to the setting of priorities, strong commitment from senior management to achieving them, clear action plans, and support in the form of adequate resources to achieve the goals. Credit is due to the many public servants who have worked hard on resolving these matters.
Now, Madam Chair, my colleagues and I would be pleased to answer any questions the committee members may have. Thank you.
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We very much hesitate to recommend organizational change. We think it's really up to government to decide how it wants to organize itself.
The main issue we're raising here is that the regime within Parks Canada would appear to be appropriate because there is a law and there's a policy. For all of the heritage sites, they're managed or owned by departments other than Parks Canada—for example, national defence, public works, even fisheries and oceans. They are only subject to a Treasury Board policy, which only covers buildings. It doesn't cover other sites, archaeological sites, for example, or canals. As well, there is a really serious disconnect between the activities of designating a historic site and then the funding and the activities for conservation.
So you have operating departments. We have an example in here, in the Minister of National Defence, who will have to put several million dollars into restoring the Halifax armoury. Well, that may not be the highest priority for them. The same thing at fisheries and oceans, to be maintaining and conserving lighthouses when they are facing budget crunches.
So there's a real dilemma, I think, for those operating departments, and yet these sites are continuing to be designated.
:
Thank you very much, Madam Chair.
Thank you for being here, Ms. Fraser and your officials.
I will do like my colleague and try to cover three or four points during my seven minutes.
I disagree with my colleague on the issue of passports. At my riding office, my role is to help people. I have no complaints to make about the work done regularly by staff at my riding office.
With regard to what you indicated, emergency planning is totally inadequate for crisis situations. Like many of my colleagues, I can attest to the fact that there is no planning for western hemisphere travel initiative—I do love those titles—and that is surprising.
Given your past audits, I am astounded to see that there was no planning. We knew that this was coming and it is not because we are now working 24 hours a day, 7 days a week that the problem will be resolved. People need to travel. The thing that is very serious is that we do not have access to members' offices, Forget that! Unfortunately, people employed there are quasi-incompetent, and I am being polite. You then contact Passport Canada.
At point 5.40, you refer to security by stating that some employees have access rights that allow them to produce passports, without being properly authorized or having the security clearance to do so.
Given the crisis we are facing, does that not add to your concern?
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Thank you, Madam Chair.
Good day to all.
It's a little unusual that we can sit here in a situation like this and actually be facing really good news. I've taken a look at your comments regarding the different areas of evaluation, in particular.
As a matter of fact, when the member across the table, Mr. Wrzesnewskyj, and I sat on public accounts and went through the public opinion research, we saw the sad tale of woe that took place at that particular time. Of course, the committee made a number of recommendations based on your comments back then. I would like to comment briefly on that.
But before I get to that topic to discuss some of the areas and ask for you comments on some of the successes we have had in dealing with it, hopefully patterning other actions in other departments to parallel those kinds of successes, I have one area of concern I wish to touch on. It's on international taxation and the loopholes, and/or potential loopholes, or who knows what loopholes regarding a potential loss of revenue for the Canada Revenue Agency.
On these tax loopholes, be it Barbados, the Caymans, or whatever tax haven that is used, you've stated in your report, at page 5 of the status report, the agency has yet to deal with the low level of expertise in international tax audits, particularly ones that handle high-risk files. This lack of expertise could result in inconsistencies, and it could go on to problems also remaining in the matching of non-resident tax data.
Given the size and scope of this file, you mentioned as well that we're talking about over $1.5 trillion in transactions and up to $5 billion in revenue in taxation to the Canadian government at this particular time. If we have a discrepancy that's unknown, it's disturbing.
What I'd like to know is this. Do you think this is an issue that should require more scrutiny on our part? And if some additional action should be taken, what do suggest that should be?
I'll now go back to my initial comment on what I honestly consider to be a good news status report. We all have access to the report on advertising and opinion research back in 2003. And I'm not knocking the previous government; that was just the reality at that particular time.
We see that Public Works did not provide equitable access to all the suppliers. In some cases, there was no evidence that a selection process had even been carried out at all. Departments did not even follow or meet the requirements of the Financial Administration Act. In many departments, they didn't even indicate the need for undertaking particular research. They just went and did it. In other words, there was no justification or verification whatsoever.
In particular, it was noted the government paid for research that monitored, among other things, voting behaviour and political party image. They were items absolutely contrary to the guidelines that had been in place at that particular time.
This was really disturbing, but I'm encouraged that a lesson was taken and a lesson was heard. What I'm looking for from you at this particular time is this. When you fix a problem, do you reinvent the wheel or do you fix the wheel? In one statement in particular, you said than rather than simply creating new rules, the government in question, the government now, and of course the public service, focused on the rules and took action on those rules.
Can you give us some examples of that?
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I think the major problem facing the government is the increasing number of heritage sites. We indicate in one of the examples here that the numbers are increasing every single year.
The Department of National Defence has 8,000 buildings that are over 40 years old that should be evaluated under the policy. I don't think everybody is going to say that 8,000 buildings are going to be...but even just to evaluate them all.
The system has difficulty conserving the ones that are already designated. We give the example of Fort Henry. We give a whole bunch of examples of sites that I think most people would say are clearly national historic sites and are in significant need of major repairs.
We're saying that there needs to be a much better link between the whole aspect of designating the sites and the funding for the conservation, plus establishing priorities.
As shown in exhibit 2.4, about 400 to 500 sites are evaluated every year, and 30 to 50 are designated. It just keeps adding on to a situation that is already difficult.
So depending on the level of funding, I guess some could question whether there would ever be enough funding for all of it. Given the level of funding that exists, the government has to pick some priorities and decide what we have to keep.
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I know I can ask the Department of Public Works this question, but I'll ask you, because maybe you can help me with a shortcut here.
Ever since I was first elected, back in 2000, there has always been a private member's bill—or 10—before the House, where somebody is saying they're going to have their local post office or their local whatever declared a heritage site.
I guess this is a two-part question. One, is it your sense that it is too easy in Canada for sites to be recognized as heritage sites, and then, therefore, you have all the—?
I know, for example, in my riding, Terry Fox is buried in a very quaint, cute, small cemetery that's actually quite humbling for a real Canadian hero. It's actually a neat place. I looked at the idea of getting it declared a heritage site. I was shocked at just how easily that's done. And then, commensurate with that recognition comes all kinds of funding responsibilities, upkeep responsibilities, designation responsibilities, and notification responsibilities to the federal government. I was really surprised at how easily a heavy burden can be brought to the federal government by a quick act of Parliament through a private member's bill or motion. Do you think this process is too easy?
Two—and then I guess I'm out of time here—relative to other jurisdictions, do you know how many heritage sites we have? I don't know if you do it on a per capita basis or how it might be done. Are we way over our proportionate number of heritage sites compared to other countries? Would you know that number?
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That is clearly an issue of policy, because it comes into the whole question of the national identification card, which was studied and discussed at length a while ago.
One of the issues that we've brought up here is the whole policy around the social insurance number. When it was introduced, the government deemed it to be kind of a file identifier and nothing more than that, largely for income tax purposes. Today this is still kind of the attitude of government vis-à-vis the social insurance number.
Over the years, the use of the social insurance number has increased significantly, not only within the federal government, but also in the private sector. We've strongly recommended in our past audits that the government needed to look at the policy again, regarding its appropriate use within government.
They did their own study in 2003 and essentially came to the same conclusions. They started some work, but then people told us they moved to other priorities, and they're saying the policy won't be updated until 2008.
We think that it's an essential part of this whole question, because depending on the what the abuse is that could lead to a renewal process for cards, or some kind of—
:
Thank you very much, madam Chair.
Ladies and gentlemen, good afternoon.
I am very interested in the issue of built heritage. I think of the horror stories that we experienced in the city of Gatineau, it was in the city of Hull at the time, when the Hammond House was destroyed. Historically speaking, the Outaouais is a young Quebec region. It was founded in 1800. The Hammond House was destroyed, and the mayor at the time said that it was better to destroy that historic house and make room for a car dealership, which would provide the city with tax revenue, than to preserve the house. It was a stone building. Imagine the outcry! Unfortunately, it came too late: the house was demolished. The incident, however, led to the establishment of the Société d'histoire de l'Outaouais. Something positive was born of that negative event. Built heritage is greatly appreciated, on that side of the river.
When M. Fortier appeared last week—M. Moore spoke about that earlier—he brought with him interesting data, which I did not have. Under former Minister Brison, a list had been drawn-up with 370 or 372 buildings for sale. Under the current government, there is talk of some 40 buildings for sale. We are also told that Treasury Board does not have any set rules, or specific indications on how historic buildings have to be administered before being sold. When a clause states that the department in question has to do all in its power to find a new vocation for a building, if there are no criteria, the whole thing can be done in half an hour, depending on the efforts required.
The Canada Parks Agency has criteria, so there is at least one such agency. Treasury Board does not have any. How could the former encourage the latter? That might not be part of your mandate, but isn't there something we could do in this regard? Do you have any comments you would like to make?