:
Good afternoon, Mr. Chair, and thank you very much.
Thank you for inviting us to appear before the committee today to discuss the two reports that we tabled in the House of Commons on June 9, 2011.
Mr. Chairman, you indicated that this is the sixth meeting of the committee in this Parliament. This is the first opportunity that we've had to meet with this committee, so I would like to congratulate all the members of the committee on their election or re-election to the House of Commons and indicate that we're very much looking forward to working with this committee in this Parliament.
I'm accompanied by Wendy Loschiuk and Ronnie Campbell, assistant auditors general, who were responsible for a number of the chapters that were included in the two reports that were tabled today.
With your permission, Mr. Chair, I'd like to now give you a brief description of the chapters in each of the reports that we've tabled.
[Translation]
I am going to start with our Spring Report. The first chapter deals with the expenditures for the G8 and G20 summits. We found that Parliament was not clearly informed of the total amount of funding requested by departments.
[English]
Fourteen departments asked for funding over two fiscal years in seven separate requests. This made it almost impossible for Parliament to know the total amount of money that was being requested. Government should ensure that parliamentarians have a clear picture of the total funding being requested for initiatives involving many departments such as this.
At the time of our audit, departments were projecting expenditures of about $664 million for the two summits, just over half of the $1.1 billion that was approved by Parliament. Because of the short timeframe to prepare for the summits, departments had to prepare budgets quickly, often with limited information. As a result, the funding requests significantly overestimated the amounts needed.
I turn now, Mr. Chairman, to the G-8 legacy infrastructure fund. Parliament received a request for $83 million for the border infrastructure fund. It was not informed that $50 million of that amount was intended to fund infrastructure projects in the region hosting the summit. When government presents a request for funds to Parliament, it should be transparent about the intended use of the money.
Thirty-two projects were approved for funding by the former Minister of Infrastructure on the advice of the former Minister of Industry. Public servants were not involved in the selection of the projects.
[Translation]
I am very concerned that documentation was not available within the federal government to explain how or why these 32 projects were selected. Supporting documentation is important for transparency and for accountability.
[English]
I will move now to the reserve force pension plan. This plan had been under discussion and development for more than 10 years, yet the Department of National Defence dropped the ball. As a result, many reservists could face delays of seven years or longer to find out what their pension benefits will be. The department did not have enough staff or adequate systems in place when the plan came into force in 2007; this led to significant backlogs.
About 9,000 reservists in the plan have sought to buy back past service. At the time of our audit, fewer than 400 of these requests had been processed.
[Translation]
Reservists play a critical role within the Canadian Forces. They should not have to wait this long to receive the pension services they are entitled to.
[English]
I will now move to the chapters in our 2011 status report. Our status reports answer the question: has the government made satisfactory progress in acting on problems identified in past audit reports. We are reporting satisfactory progress in two of the six areas we examined, those two being financial management and control, and internal audit.
The opening to the status report, “Matters of Special Importance”, was Mrs. Fraser's final message to Parliament as Auditor General. In it, she noted areas where the government has made progress and two areas where she reported action is needed.
[Translation]
The first chapter of this report deals with financial management. With annual spending of about $275 billion, the government clearly needs good financial management.
We are pleased that the government has enhanced its financial management capacity with a significant increase in people with financial expertise.
Internal audit is another area where we found satisfactory progress.
[English]
Strong internal audits can help an organization achieve its objectives, improve its management practices, and make it more effective. I'm particularly pleased to see the significant improvements made in internal audits. I'm also impressed by the role departmental audit committees are playing in strengthening internal audits and in improving management practices.
[Translation]
Let me turn now to large information technology projects, one of the areas in which the government's progress has been unsatisfactory.
Continued investment in information technology is needed to deliver services to Canadians. Developing these systems is complex and expensive. It needs to be managed well.
We note improvement in certain areas. However, action is needed in planning and monitoring projects, and measuring results—areas that are still weak.
[English]
The government's progress has also been unsatisfactory in the area of programs for first nations on reserves. I am very disappointed that conditions on reserves have worsened and are well below the national average.
The education gap between first nations living on reserves and the general Canadian population has widened. Houses are in poor condition, and the housing shortage on reserves has increased. More than half the drinking water systems on reserves still pose a significant risk to the communities.
A preface to this chapter provides an overview of the structural impediments that have hindered progress on reserves.
[Translation]
Improving conditions on reserves will be a difficult challenge. It will take first nations and government working together in new ways to resolve these issues.
[English]
Turning now to the national police services, the RCMP provides specialized services used by police forces across Canada. These include fingerprint identification, DNA analysis, and other services important to public safety in the criminal justice system. The RCMP has made unsatisfactory progress in addressing longstanding issues that affect its ability to provide these services. We are concerned by the lack of progress in this area. The federal government, working with provincial, territorial, and municipal partners, needs to decide which police services should be provided and how they should be delivered and funded.
I'll turn now to the chapter on regulating medical devices.
Canadians rely on Health Canada to ensure that they have timely access to safe and effective medical devices. These devices range from bandages to pacemakers. They play an important role in the quality of health care. The department's progress in regulating the safety and effectiveness of these medical devices has been unsatisfactory. Health Canada needs to improve its on-time performance, use foreign reviews to reduce delays, and ensure that it adequately monitors the safety and effectiveness of medical devices available in Canada.
[Translation]
The last chapter in the status report includes the main points of special examination reports on four crown corporations. They were issued in 2010. We report on whether or not there were significant deficiencies that could prevent these corporations from achieving their objectives.
[English]
We are pleased to note that there were no significant deficiencies in two of the corporations we examined: the Canada Deposit Insurance Corporation and Telefilm Canada. We did, however, find significant deficiencies in the National Arts Centre Corporation and the Freshwater Fish Marketing Corporation.
[Translation]
Mr. Chair, that concludes my opening statement. We will be happy to answer any questions you may have.
Certainly I extend a warm welcome to our guests. I can tell you it's been a privilege to work with you over a number of years now. I look forward to continuing to assess, work together, and provide both of our efforts for a much better future. You do great work, and we thank you for that.
Might I say that I've served on this committee for a number of years? I almost hate to bring up another word but I'm going to. I've actually served on this committee since the dear old sponsorship scandal, which was winding down at that point. I know some opposition members have tried to draw a comparison between the two, which I find a little bit disconcerting in a way. We all know that in the sponsorship affair we didn't know how much was involved, to whom the money went, what it was for, where it went, and what it was. There were numerous legal convictions, and for all intents and purposes, there are more to come.
I've noticed that you said in your statement last June that this is just not a sponsorship scandal.
Can you please highlight the differences between what we have here with this examination versus the impropriety of the sponsorship affair?
I also want to commend Mr. Wiersema, who hoped to retire earlier in the summer, but he is carrying on in the office as the interim Auditor General. I want to thank you for your years of service, not only what you have done prior, but filling that gap until the new Auditor General is selected. Thank you very much.
I'd like to go to some of the comments. It talks about "funds used for intended purposes”. Obviously they're talking about G-8 and G-20:
We found the sampled transactions were for expenses incurred as a result of summit activities for security and organization and hosting. Further, we found that these transactions were consistent with the plans and budgets for which funding was approved.
I think what you were saying in your comments earlier is that the government got what it paid for. In terms of some of the comments from across, there seems to be a desire to generate that there must be some criminal activity happening here. As we all know, that is not the case.
We heard day after day about how bad it was to spend the $1.1 billion on a conference that had never before been held with the G-8 and G-20 together. What we found—and some of us may criticize this—is that actually it's not $1.1 billion, it's $664 million, which was about 61% of the approved funding.
It would appear that not only did the government get what it paid for, it would appear that the government did well in what it got in terms of the allocation of funds. It went through the estimates. A minority government, quite honestly, couldn't approve it without the support of others. It went through Parliament.
Then it talks about “the exception of a lack of an overall assessment”. We agree. I think that's what this committee is actually for, and we've always supported it as a government. If there's something wrong, let's deal with it, because whatever that department or that ministry is, it should be accountable.
It would appear to me that there has been a lack of procedural process that's been followed or a process that is not in place.
You say at the end, in one of the responses, that the Treasury Board has responded, and the secretariat agrees with our recommendation about the process. Is that true?
:
Thank you very much, Mr. Chair.
As you noted, I have precious little time to be able to ask questions. The providence of the committee has decided to change the normal standard of what would be considered from a majority government. The practices of this committee, from a majority government till today, are quite different, so I have limited time.
With limited time, I want to take some time to say thank you. You've had 34 years in the Office of the Auditor General. You've served this Parliament and this committee with wisdom, and your advice is appreciated.
With that said, I'll get right to my question.
Expediency. The government has suggested that its contrition for its shortcomings was caused by the need for expediency, yet we know that the 2010 Muskoka summit was planned for, implementation began, and things were well under way one and a half years before the actual summit.
In your professional experience, having 34 years within the Office of the Auditor General, could something have been done within that 18-month timeframe to put in place the financial authority to ask cabinet and Treasury Board and to seek approval through the supplementary estimates for the financial authority to engage in these projects?
I may not take all the time, but I do want to return to my comments of a little earlier about the process. There were 14 different agencies. There was $1.1 billion that actually ended up to be $664 million, so 61% of the amount that was approved was actually spent.
My comment, though, is that you talk about the complexities of it—and don't ever take away from that, because it's a bit like the whole economic action plan, rolling out that much money so quickly that we wanted to make sure mistakes were not made. We now have an internal audit that talks about a financial management internal audit that helps bring about, I think in your words, accountability and transparency. So that is good.
But during this time, when it was actually approved by Parliament, all of us stood up to pass this—well, enough stood up, because we were in a minority government. Since then, if there was this big a concern, which has been going on now for weeks, was there communication at any time from the opposition to the Auditor General saying it didn't know the complexities, didn't understand them, and asking how it came about this way or if there was a procedural...? Did any of that ever come to you, to the Auditor General, raising those concerns, which have been on the table now every day since Parliament has resumed?
Mr. Chair, I think the question was answered very well. Both questions were answered well.
Because all reports of the Auditor General are very important to us, let me ask something about the reserve force pension plan. Specifically, I want to relay a circumstance.
A hero from my riding, Corporal Brian Pinksen, who was asked to serve his country, and did so quite willingly, lost his life in Afghanistan. He was a reservist with the 2nd Battalion, Royal Newfoundland Regiment. One of the things I think we all owe all of our reservists is to allow them a certain amount of security. That's, I think, what your chapter on the reserve force pension plan was all about: making good on a promise. Yet your audit revealed some pretty startling, very stark details about not fulfilling that promise. Anyone who's looking for a basic transaction to occur related to their pension plan, as has been guaranteed or promised them, could wait up to seven years before a basic transaction occurs.
One of the things you mentioned was that staffing resources were critical and that staffing resources were not available to allow the reserve force pension plan to function appropriately. Yet retired General Leslie says that the headquarters at the Department of National Defence is bloated with staff.
Would it appear to you that maybe there's a sign or a signal here that resources are not being used effectively by the Department of National Defence? If one side, your office, sir, is saying that there just weren't enough staff, and yet a senior member of our military, someone who has experience in this as well, is saying that in some sectors there are too many staff that are not functioning correctly, is that a misallocation of resources? Would you categorize it that way?
:
Thank you for the question, Mr. Chair.
I will turn in a moment to Mr. Campbell to help me with this because Mr. Campbell has been responsible for a lot of the work we've done on aboriginal issues in the office. He's intimately familiar with them.
Our report identified four structural impediments. The first one is that most of the services the federal government provides on reserves do not have a basis in legislation. They're not a statutory service. It's not like the Government of Ontario, which has a statutory requirement to provide education services. That does not exist with respect to the services provided on reserve. They have no basis in legislation, for the most part.
The second impediment is the absence of service standards. For most of the programs, what level of service the federal government tends to provide on the reserves is not clearly defined.
The third impediment has to do with the way the programs are funded. Most of the programs are subject to annual contribution agreement funding, which requires that new agreements be prepared and negotiated every year to provide those services on the reserves. By the time they get the money, a big part of the year may have already elapsed.
The last impediment is the capacity of first nations to actually provide those services on reserve. Again, I'll use the example of education. The provincial governments have school boards that work to ensure the education services are provided to all residents of the province. That capacity doesn't exist for the programs on reserves.
If the chairman would allow, I'm sure Mr. Campbell could elaborate, if you would like.
:
Thank you, Mr. Chairman.
I would like to thank our guests for their work and for sharing their precious time with us.
One of the most significant aspects of the work we do in this committee involves examining the way money is spent. So, I would like to talk specifically about numbers. Almost $50 million was spent on these projects. Of that amount, almost $30 million was spent in the Municipality of Huntsville.
I am looking specifically at the two most expensive projects, including the supposed media centre that ultimately was not used for that. It was made 6,500 square meters larger to include an olympic-size skating rink—I fail to see how reporters would have found the time to play hockey—with a capacity of 1,400. Almost $17 million was spent on that project. The other one involved a facility at the University of Waterloo that has not been used by students thus far, as reported in an article that recently appeared in the Globe and Mail.
The problem with all of this is that I cannot ask you whether we received value for money, because you made the point quite eloquently that this was not part of your mandate and that you did not concern yourself with what happened subsequently. In your opinion, when the decisions were being made as to how the money would be spent, were the proper procedures followed to ensure there would be good value for money, not only in relation to the G8, but also for future generations?
:
Thank you, Mr. Chair, and thank you very much to our witnesses.
Mr. Wiersema, I also agree you've had a distinguished career. I have had an opportunity to be here on this committee and to hear some of the reports that you and your team have put forward. I certainly do appreciate them.
I'm actually going to go to chapter 4 and deal with first nations.
Mr. Campbell, I know we will most likely be dealing with those things.
I spent some time on the aboriginal affairs committee, and I know many of the issues that were brought up in chapter 4 are things that have been talked about afterwards and are starting to be addressed. Certainly, as we recognized in the AG report, it's looking at what has happened in the past. I know Mrs. Fraser was looking back a number of years and saying there have to be some changes. Certainly as far as our government is concerned, the comments are important. We are trying to focus, though, on where we are going to go and on the forward working relationship we have with aboriginal people.
Again, I suppose, the feeling is there. I know on the committee there is a strong and ongoing commitment for improving the lives of aboriginals. There is progress that has been made: achievements in economic development, infrastructure, and education--I'm a former teacher, so I have a lot of interest in that area--as well as changes that have been occurring as far as water in communities is concerned, child and family services, other active measures, and associated land claim settlements. These are some of the things that are to take place, but as Mr. Wiersema was saying, there are these impediments there. Some of them, of course, are associated with how fast one can move on some of those particular issues. Part of it is that I would like a discussion on how you see those particular impediments and how we can improve that.
We know there has to be collaboration with first nations in order to move onwards on any of the types of projects we have. We agree to develop the implementation plans with other federal organizations. These are parts of the things we are looking at. I am specifically looking on page 44 at the recommendations we have in paragraph 4.86, where we speak about the plans, the specific goals, the targets, the action items, and the timelines for achieving results and indicators for measuring progress.
I am curious if perhaps you can speak to some of the implementation plans that are associated with the responses you see.
:
Certainly. Thank you, Mr. Chair.
One of the things that I think is important to state, and we've stated it in our report, is that fundamental change is needed in how governments tackle the terrible conditions on reserves. Having said that, we also say that these are complex issues. As auditors, there is an accumulation of 10 years of work. We've brought it to you to say that in some cases you can't get there from here. We talked about the reporting burden, but the fundamental thing is how we will be funding those programs in the first place.
I recall being at this very committee, Mr. Chairman, many years ago—I think Mr. Williams was in the chair at the time—and having a discussion with the First Nations Health Council, and the issue about there being no legislative base. I recall senior officials from government eventually saying a bureaucrat would much rather a legislative base than the types of bases they have.
There is no doubt in our mind that solutions will be very difficult to reach. The member mentions relationships with first nations. That takes you into a world that's not the auditor's world. It's a world of policy and politics. A lot of the solution is there. Not only that, when you are looking at education, where are the educators in the country? They are in provincial regimes--and the health professionals and the social workers.
One of the things we say in the report is that, wherever they are found, the solutions are found in looking for fundamental change—maybe not the small increments, but the fundamental change—and bringing together not only first nations, but reaching tripartite agreements, which we recognize as not easy at all.
I must say that I prefer that because it allows us to use as much time as possible to get questions in the public session, but it also allows us to get some of our homework done to determine how we go forward.
Do I have agreement for that? We'll do six rounds at two minutes, and then I'll take a motion to end this public session and we'll go into the steering committee, which is done in camera, and then begin talking about our process of chapter selection.
For the public, the step after this concerns all these chapters we have in this report. The committee makes a determination, as we do with every report, on how many, if any, of these chapters we're going to hold hearings on. That process and decision will flow from today's hearings.
With that, I will immediately put us back in rotation and start with the government benches, so the floor is open to a government member.
I recognize Mr. Saxton. You have the floor, sir.
:
Thank you. It was getting lonely there for a while, Mr. Chair.
I hope this committee reflects on the perspectives and the wisdom that was offered by the interim Auditor General in terms of our selection of chapters, of issues, that we study.
I hope we do not move in camera while we do that, Mr. Chair. I hope we have an open and transparent discussion as to what exactly we should discuss, but I hope we operate on the basis that we will look at everything, that we'll try to budget time, but everything is available to us and that there will be no closure on the types of issues that we as a committee will look at. I'm sure the public will be interested to see what we produce at the end of the meeting in terms of our agenda going forward.
I want to move very quickly.
You've outlined, Mr. Wiersema, a very stark circumstance regarding first nations on reserve. You have indicated to us, to Parliament, through your report that anything less than a legislative base in response to some of these issues will probably not produce the required results. Would that be a fair categorization? In terms of a government response to this issue, you're looking for a legislative basis on which to respond to some of these key issues.