[Recorded by Electronic Apparatus]
Wednesday, November 27, 1996
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[Translation]
The Chairman: Order please. Good afternoon.
On this Wednesday, November 27, 1996, the Public Accounts Committee, pursuant to Standing Order 108(3)d), proceeds to the consideration of the 1996 Annual Report of the Auditor General tabled on Tuesday, November 26, 1996.
Before inviting Mr. Desautels, the Auditor General, to speak, I'd like to remind my colleagues that the Subcommittee on Agenda and Procedure may possibly meet tomorrow to adopt the list of chapters that we consider to be a priority for the future work of this committee.
It will be difficult today for the Auditor General to deal in any depth with the detail of each of these chapters because I think he would require the presence of the department concerned as well as the auditing staff responsible for the audit. However, that does not prevent you, colleagues, from asking your usual very interesting questions.
I'd like to give the floor to Mr. Desautels. I believe you have an opening statement,Mr. Desautels, but before doing so, I would to ask you to introduce the persons accompanying you.
Mr. L. Denis Desautels (Auditor General of Canada): Thank you, Mr. Chairman.
I am accompanied today by Mr. Raymond Dubois, the Deputy Auditor General, and Mr. David Rattray, Assistant Auditor General, whom you already had the occasion to meet.
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It is a pleasure to have the opportunity to meet the committee again today. Before talking about our suggested priorities for your consideration, I would like to talk about some of the recurring themes in this report which we tabled yesterday.
The first is the need for better accountability, and particularly the need for accountability to keep pace with the changing nature of government. This is especially true of the growing number of joint programs involving the federal government and other partners, where accountability can become diffused.
The second issue is related to the first. The federal government is not providing the quality and extent of information that Parliament and Canadians deserve, especially on the results of programs and services. I'm encouraged by the work now underway to revamp reporting to Parliament but concerted efforts and a change in attitude will be needed. Some jurisdictions, such as Alberta and our neighbours to the South, have an enacted legislation requiring that government to provide a full accounting for performance. In my opinion, this is an idea that deserves consideration.
Third, government departments often lack key information needed to properly manage their programs. Parks Canada, for example, has not collected the kind of systematic scientific data it needs to monitor ecological changes in national parks. Throughout, government information is often lacking on costs - a sign that financial management and control needs to be strengthened.
[English]
This report notes that significant cost savings can still be achieved by the federal government even after the restraint measures that have been taken. We note that hundreds of millions of dollars could be saved annually, for instance, through better management of information technology projects, matériel, National Defence productivity, and CPP disability.
Parliamentarians of all parties have encouraged us to maintain our focus on tax issues. In this report we note the need for Revenue Canada to strengthen tax audits of large corporations further. We also note that the complexity of GST rules for residential housing is contributing to some non-compliance.
In the interests of keeping this statement relatively brief, Mr. Chairman, I will concentrate the balance of my opening remarks on our suggested priorities. Of course we would be very happy to respond to questions related to the other chapters in this report.
Chapter 23, entitled ``Materiel Management in the Federal Government'', deals with our office's first government-wide audit of matériel management in the federal government since our 1980 report. With annual government expenditures on matériel of approximately $8 billion and current holdings valued at approximately $50 billion, it's important that departments achieve value for money in acquiring, in using, and in disposing of these assets. In 1980 and in subsequent audits we reported a range of deficiencies in the government's matériel management practices, and many of these deficiencies still exist today. Your committee's review of our findings could serve to focus departmental attention on the need to follow through with many of the initiatives now under way and to secure commitments and a timetable for doing so.
Chapter 24 presents findings and recommendations related to four large information technology projects, representing some $3 billion in investment. The four projects reviewed are the responsibility of Transport Canada, National Defence, and Public Works and Government Services Canada respectively. They are complex initiatives, which will take several years to implement. They are critical to reducing the cost of government and improving service to the public. All the projects are at a high risk of being late and they are costing much more than originally planned. Similar observations were also raised in chapter 12 of our October 1995 report. Your committee issued a report on this chapter earlier this year.
The second part of chapter 24 deals in more depth with one of the four projects, the Canadian automated air traffic system, known as CAATS. We noted that the renegotiation of the CAATS contract resulted in additional costs of $217 million being assumed by the Crown. The department's part IIIs disclosed only $75 million of these costs to Parliament, and the full cost of restoring the contract to good standing, which is approximately $200 million, was not disclosed to decision-makers. Finally, the department has not established what it needs to do in verifying the performance and safety of CAATS.
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The committee may wish to review chapter 24 with Treasury Board Secretariat and either Transport, National Defence, or Public Works and Government Services Canada.
[Translation]
Chapter 26 reports on the audit of the Canada Infrastructure Works Program, a $6 billion initiative introduced in 1994, with the federal government contributing up to $2 billion and the provincial and municipal levels of government the remainder. We identified needs and improvements in the design and implementation of future infrastructure programs to improve control and accountability for federal expenditures.
The audit reveals there was a lack of clarity in the criteria for selecting projects and targeting the programs. Also, federal officials had insufficient information on an ongoing basis to support the appropriate exercise of their responsibilities for this contribution program. We estimate that about 35% of program spending in 1994 simply replaced normal or local capital spending and, to that extent, failed to trigger traditional infrastructure investment to create additional jobs.
Your committee's review of our findings would assist the federal government should it contemplate any new programs of this type or renew the present program.
The committee may be interested in reviewing Chapter 30, Correctional Service Canada - Reintegration of offenders, in conjunction with Chapter 10 of the May 1996 report chapter on Rehabilitation Programs for offenders. Chapter 30 reports on the efficiency of the Service's institutional case management process and its contribution to offender reintegration.
The audit found systemic weaknesses in the Service's management of its reintegration activities that may compromise public safety. Correctional Service Canada has difficulty getting information on offenders from official sources, consistently preparing the casework of offenders in time for their first parole eligibility date, and managing the working environment of case management officers. The chapter emphasizes again the difficulty the Service has in resolving problems with the reintegration half of its mandate.
[English]
Chapter 33 deals with the audit of funding arrangements between Indian and Northern Affairs Canada and first nations, tribal councils, and other recipients. The department's role has evolved over the years to one approaching a funding agency, with $3 billion currently flowing to the first nations recipients. The funds are used to administer and spend on programs such as education, social assistance, and infrastructure. The financial transfer arrangement, or FTA, is being piloted, with a plan for full implementation by 1998-99. In our view a cooperative approach with first nations will be needed to ensure that accountability appropriate to the circumstances is established, that risks are managed, and that implementation problems are properly addressed.
We've raised the issue of accountability previously, most notably in chapter 14 of our 1991 report and in chapter 13 of our earlier report this year. Such a significant spending program merits this committee's attention, I think. The public accounts committee has not had a hearing with DIAND for a number of years now.
Chapter 34 reports the productivity of support functions at the Department of National Defence. Support functions consume 27% of the overall defence budget, or about $2 billion a year. After two years of effort, renewal is proceeding slowly. Few results are visible at this time and senior management believes it's too early to see any results. Managers still lack cost and performance information. At Canadian forces bases we found several instances where productivity had declined. In other cases it varied from base to base.
Chapter 37 deals with Revenue Canada's program for enforcing the Income Tax Act for large corporations. These corporations pay about 25% of total corporate tax revenue, or $4 billion annually.
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The audit noted that Revenue Canada's auditors face many challenges in doing their work. Our report outlined some of these challenges. The report also identifies opportunities for improvement in the area of issue selection, measurement, reporting of results, and human resources management.
[Translation]
Thank you, Mr. Chairman, that concludes my remarks. We would be pleased to answer your questions or provide explanations to help the committee plan its work over the next few months.
The Chairman: Thank you, Mr. Desautels. We shall move on to questions. Mr. Rocheleau has the floor.
Mr. Rocheleau (Trois-Rivières): Good afternoon, gentlemen. I have three questions, the first dealing with the Canadian government's export efforts.
You seem to be quite severe in your judgment. I'd like you to comment, particularly on the efforts undertaken as part of the Team Canada approach. You say:
- Generally speaking, there's no evidence to indicate that the trade promotion undertaken by the
government results in increased exports. However, the results of certain promotion activities
are often measurable.
- None of the international trade centres we visited was aware of the volume of its activities or the
cost of each of its services.
You also say:
- The Canadian international trade strategy [...] does not have the task of accounting to
Parliament for the money used in order to achieve the Team Canada's objectives.
There is no concept of user-payer. It is even possible to take advantage of the Canadian government's services without exporting. Does that mean it's really a bit of a free-for-all or would that be overstating things?
Mr. Desautels: Mr. Chairman, we do note a number of shortcomings in the chapter, but I wouldn't go so far as to describe it as free-for-all. Basically we noted in the chapter that the Department's services are generally quite well appreciated by the businesses using them.
However we do think that the Department could do a better job with respect to assessing its results in order to better judge what is more cost-effective or less cost-effective.
It could also be more rigorous in identifying the costs of the different services it provides and establish clearer guidelines on what is part of the basic service accessible to everyone and which services are to be paid for in full or in part by certain users.
This is a department that is working on a relatively sound basis and seems to be appreciated by the users. However, it could introduce a greater degree of thoroughness in certain aspects of its management without decreasing in any way its efficiency or flexibility.
Mr. Rocheleau: In the case of Team Canada in particular, does that mean that at the present time there is no way of knowing, in view of the way the books were kept, how much this particular effort cost the government of Canada?
Mr. Desautels: I will ask Mr. Rattray to answer that part of the question.
[English]
Mr. David Rattray (Assistant Auditor General): Mr. Chairman, what we're suggesting with our recommendation in the chapter is that more information along the lines that the member is suggesting be provided to Parliament. Currently Industry Canada and International Trade, as part of Foreign Affairs and International Trade, report on various parts of their activities in export promotion, but we felt more aggregated information would be more useful when members ask questions about the activities and the cost of Team Canada, the 21 players and agencies involved in Team Canada.
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[Translation]
Mr. Rocheleau: My second question is about the infrastructure program. You say in your report that in fact, 35% of the projects undertaken as part of this program would have been completed any way. Could you elucidate on that? There is a very significant impact on the number of jobs created, as the media reported.
Mr. Desautels: Mr. Chairman, our report indicated that according to our estimates, which were in fact confirmed by others, some of the projects approved the first year would have gone ahead or these projects replaced other projects that would have gone ahead. If you add up those two factors, there is a displacement of approximately 35% of the volume that was approved for the first year. In other words, we estimate that approximately 35% of the projects approved for the first year were displaced into projects that would have gone ahead any way or that these projects would have gone ahead in any event.
However, it is difficult to translate that percentage into a reduction in the overall figure that had been estimated, because we only evaluated this for the first year. That was the only year for which we had sufficient economic data available.
We are not alone in saying that the program did not achieve an ``aggregate'' of a 100%. Others who had projections have in fact reduced the percentage of ``aggregate'' that had been provided for under the program.
Mr. Rocheleau: Are you able to determine the number of jobs that this 35% represents?
Mr. Desautels: No, that is not possible; we haven't done enough work to translate that 35% into an estimate of the number of jobs. Now, I do imagine that it would be possible to do more work in an attempt to do that. Perhaps it could be done as a second stage.
Mr. Rocheleau: My last question is about historic canals. You know that the Coast Guard plans to impose a tariff on pedal boats, row boats and soul boards. I don't know if we were the ones to invent these figures, but I think $10 to $15 per craft was mentioned. The Official Opposition finds this a bit ludicrous, especially since we have learned that using a lock cost $3.48 for passage in 1995 according to your figures, and $2.75 in 1988. We're not talking about a pedal boat here, but a luxury craft, with human beings or computers managing this.
You express some reservations about that, I would like you to elucidate on the fact that increasing the tariff in locks could have a negative effect. I won't try to hide the fact that this is an avenue that one is tempted to recommend to the government. Before taxing someone who has a very small craft on a little lake where the coast guard has never set foot, let's think of the people who can afford to pay for luxurious crafts and use the government of Canada locks.
Mr. Desautels: Mr. Chairman, I will ask Mr. Dubois to answer Mr. Rocheleau's question.
Mr. Raymond Dubois (Deputy Auditor General, Office of the Auditor General of Canada: Mr. Chairman, Mr. Rocheleau, what we are suggesting in this chapter, is that the Department should conduct a better analysis of its operating costs and have better distribution among the users, including boat owners.
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The restriction that you may have perceived in the report is that the Department itself, in its response, says that if tariffs were increased, boat owners would no longer use the canals.
You can't automatically transpose the increase on tariff on current volume, because volume can decrease if tariffs are increased. From our standpoint, that's another subject.
We suggest categorically that there be a better cost analysis and better distribution of costs among users, as the departments are encouraged to do in accordance with government policy.
Mr. Rocheleau: Has it been demonstrated that this would automatically bring about a decrease or is this an assumption?
Mr. Dubois: From our point of view and at this point, it's an assumption. It has not been scientifically demonstrated.
The Chairman: Thank you, Mr. Rocheleau.
[English]
Mr. Solberg.
Mr. Solberg (Medicine Hat): Thank you very much, Mr. Chairman. It's a pleasure to come to this committee for the first time, and it's always good to have the Auditor General before us.
Mr. Desautels, about Canada Infrastructure Works, has your department looked at the negative impact of job creation when the government takes $6 billion from taxpayers to put into a program like this? How many jobs does taking that money out of the economy initially kill, as compared with how many it creates once it's put back in in the form of an infrastructure program? Did you take a look at that at all, or did you look only at the one side of the program?
Mr. Desautels: Essentially we looked at one side of the program. The reason for that is that the rationale for the infrastructure program was that it is meant to be new money, money to be spent on things that would not have occurred in any case. Obviously if that doesn't hold, if it's taking away money from other possible sources or programs, then of course it ends up having a displacement effect. But for the purpose of this particular study we started from the assumption that this was new money, and if it was new money, how effective it was in creating additional employment.
Mr. Solberg: But if it's new money, if it comes, for instance, from taxpayers who were using it for consumption or investment themselves, those two activities would create all kinds of jobs on their own, simply by what the taxpayers do in the normal course of their lives, consuming or investing or saving, which is saying the same thing. Obviously that creates a lot of jobs also. If you simply take it from that side of the equation and put it into government spending, the net effect is it's not going to create any more jobs, is it?
Mr. Desautels: I'm well aware of the different theories, and also different and very valid economic analyses, which tend to discount, for instance, the regional benefits that are generated by putting a contract in a particular locality or somewhere else. In this particular study we did not actually look at that aspect of the economic question. We basically focused on the program itself for what it meant. Obviously the program is based on certain economic decisions, but we didn't take into account the alternatives to this program, nor what those effects would be. We just focused essentially on the program as it was labelled and tried to see how effective it was.
Mr. Solberg: Pretty clearly, when the government decided to go ahead with this, one of the great advantages for the government was that you can actually see people out there with a pick and a shovel in their hands for your $6 billion, as opposed to when you put the money in the bank and the bank reinvests it or when you allow taxpayers to use it for consumption; the effects are less obvious then.
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I think there is a political impact, but I won't press you any more on this. I know it's not your decision to make.
One of the concerns I had about the infrastructure program was that it puts the municipalities in an almost untenable position. In some cases you have municipalities that have excellent infrastructure and the pressure is on them, because the money comes from their own people, to spend that money anyway, even though they already have good infrastructure. So you have a situation where you have them spending money on things such as sky boxes and things that most people would not consider infrastructure. On the other hand you have the government saying the role of this is job creation. You also have another element in here, where you're saying part of the role of this is to shift money from provinces with low unemployment to provinces with higher unemployment.
Isn't one of the problems with infrastructure that there is no clear goal for each municipality to work to? Aren't they getting some mixed messages from the government?
Mr. Desautels: I happen to know the municipal sector quite well too. In the past I've had some experience in that field. For good reason, municipalities like to think they're quite autonomous. So I imagine the fact that this program is there doesn't necessarily put undue pressure on municipalities. I believe they're entirely free to carry on with their programs the way they probably had intended.
Mr. Solberg: Maybe I misspoke myself. Let me clarify what I meant. What I meant is that if a city such as Calgary, which has good infrastructure, decides it is going to forgo participation in Infrastructure Works but they know $2 billion of their tax dollars are going to the federal government and will be spent elsewhere in the country, that means the City of Calgary almost has to be involved in the program so it doesn't send taxpayers' dollars from its own city into other jurisdictions.
Mr. Desautels: I don't believe that's the way it would work out. My understanding is that the total federal participation was allocated to each province according to specific formulas. If a particular municipality in a province, such as Alberta, would forgo participating in the program, that would simply leave more money for other infrastructure programs in that same province. So it's not really shipping money away from the province, because -
Mr. Solberg: No, but from that municipality it would be. If Calgary didn't use it, Edmonton would get it. It would make another jurisdiction more competitive. In essence the municipalities are are pressured to spend even though they may not need to use the money in that particular year. So you had it spent on all kinds of projects that really weren't necessary. Isn't that correct?
Mr. Desautels: I hope that is not the case. I hope municipalities made decisions that made sense to them. I think we would basically have to poll the municipalities and ask them what in fact they've done.
The feedback that we seem to be getting from municipalities, by and large, is of course that they love this program. It basically suited them. I would like to think the Federation of Canadian Municipalities really believes that and they weren't just saying it.
Municipal governments, particularly the ones you name, the large municipalities, are fairly autonomous and have very good long-range plans. I believe they would participate in this kind of program only if it made sense to them. That's what I would like to think, or at least hope.
Mr. Solberg: I'm certain, though, there is a tremendous amount of pressure to spend money. If it's going to go from your own taxpayers into another municipality, perhaps your next-door neighbour, I think there would be some pressure to keep it in that municipality.
One of the other areas I wanted to touch on is the whole idea of a province, for instance Saskatchewan, which has a low unemployment rate, because of the way the program worked, having to transfer part of its money to another province with a higher unemployment rate, because that was one of the factors that decided how the money was distributed around, if I remember right. I think that's correct.
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So you have a province such as Saskatchewan, which is certainly not a have province, which has tremendous problems with its own infrastructure, which has tremendous problems with its highways, for instance, subsidizing another province, Quebec or one of the Atlantic provinces, when arguably its infrastructure in much worse shape, or at least in the same shape, as that of some of these other provinces in Atlantic Canada or that of Quebec. In other words, the factor of unemployment really distorted the ability of this money to be spent in a wise manner if the goal was to fix the infrastructure.
Does that make sense to you?
Mr. Desautels: Mr. Chairman, I would like to have the opportunity to check out one of the premises Mr. Solberg is working from, and that is the basis on which the funds were allocated to each province in the first place. I think they were allocated on pretty close to a per capita basis, but I would like to opportunity to check that out, because if you look at how the money was eventually spent, you see Ontario was the biggest beneficiary -
Mr. Solberg: Of course.
Mr. Desautels: - and obviously it's the biggest province. It seems to be pretty close to the size of each province.
I didn't remember it to be an equalization -
Mr. Solberg: Initially, I recall, the unemployment rate had some bearing on how the money was distributed. If so, I felt that was a very poor way of doing it, because as I mentioned, a province such as Saskatchewan, which has tremendous problems with its infrastructure but a low unemployment rate, would be penalized greatly.
Mr. Desautels: Mr. Chairman, I found the detail I was looking for. Indeed, the member is right. The funds were allocated to provinces and territories and first nations based on their respective shares of population and unemployment. So unemployment was one of the factors used in the initial allocation.
Mr. Solberg: So -
The Chairman: Your eleven minutes are finished. Mr. Crawford.
Mr. Crawford (Kent): Thank you, Mr. Chairman.
Mr. Desautels and group, thank you for another wonderful report. You've given us another few weeks of work.
The first question I would like to ask you is under paragraph 5, on Parks Canada. It's more about the Canadian Wildlife Service. I think it would be the same reasoning. You say government departments often lack key information needed to manage programs well. What happens when they have the information and they do not do things well?
I'm referring to property that was adjacent to my property, which was for sale - marshland. I was praying they would buy it. I was the only one who had a tender on it. It was an open tender and they knew exactly what I had tendered. They went over double the price. I had seen how they had wasted money there, where they could have bought it for another $10. I had told them I wanted them to buy it, not me to buy it, but they turned around and put in their bid at over double what I had offered. It was a complete waste of money, about $500,000 in one crack.
Were you referring to that kind of information, or other information they operate on?
Mr. Desautels: Mr. Chairman, I'll ask Mr. Dubois to respond to that. As a short answer first, we're really talking about another level of information in the report.
Mr. Dubois: I'm sorry, Mr. Chairman, I can't expand. We worked at a higher level and we did not get into that type of situation.
Mr. Crawford: It's still the grass roots that cost a lot of wasted money.
My second question is on item 7, residential housing contributing to non-compliance. Are you referring to carpenters, painters, and electricians who are dealing under the table, with no GST?
Mr. Desautels: You're talking about the chapter on GST on new housing?
Mr. Crawford: Yes, on new housing.
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Mr. Desautels: In short, I don't want to get into too much detail, because it's a terribly complex area of taxation. We're essentially saying in the chapter that the complexity of this particular part of the GST legislation is making it difficult, for one thing, for people to comply. There are also some possibilities of abuse in the case of - and again, this is without my getting into too much detail - self-supplied houses, normally not by the occupant by sometimes by a builder who does this too frequently.
The main message in this chapter, I guess, is the complexity of a particular part of the legislation. Without my being more precise than that, we're recommending that Revenue and Finance do a proper evaluation of that particular part of the GST legislation, presumably to find ways to simplify it.
Mr. Crawford: In item 15 you say there is lack of clarity in the criteria for selecting projects; this is referring to the infrastructure program. I felt it was up to the municipalities to decide what programs they wanted; and having been a municipal head for many years, I would say there's no better government than municipal government. I thought the program was excellent, because they would choose which they felt were more beneficial. The only way I disagreed with your view was that it would be done eventually. Eventually, yes; but as a mayor of a municipality, if I didn't have the funding.... This was a godsend, 33¢ on the dollar, that I might not get in a lifetime.
I think the money was well spent by the municipalities. I've never heard of the SkyDome boxes, but maybe some were bought. In my riding every municipality really benefited. Sure, it was short-time work; I would be the first to admit it. But it did give a lot of work throughout the whole riding. In my area at that time there was over 12% unemployment.
Mr. Desautels: One of the comments we made in our chapter was that, as a starter, the definition of infrastructure was quite broad and general. In fact, it allowed many types of projects to be approved, some of which were only semi-public or close to being private ventures but fitted under the definition of infrastructure as we know it. We think it would have been better, particularly in a joint project like that, to agree up front on clearer definitions of what is admissible, what infrastructure is.
I tend to agree with Mr. Crawford that the municipalities are quite well placed to make a judgment on what is most important to them. But since the federal government funds a third of it, I think it should make clear up front the rules it would like to follow, as one of the important partners in this particular program.
Mr. Crawford: We certainly agree to disagree on a very small piece of the information.
The Chairman: Mr. Grose.
Mr. Grose (Oshawa): Thank you, Mr. Chairman.
I would like to get off the infrastructure subject. There was something that bothered me in the news release. It said the Auditor General's study of federal debt management cautions that despite the trend toward lower annual deficits the government still needs to borrow $9.5 billion a week on average to meet its financial obligations. Surely a great deal of that would be simply debt we are turning over, would it not? It's not new money; otherwise we would be incurring a deficit of $500 billion in one year.
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I thought that wasn't made too clear, and I have a couple of questions on it. What are you guys doing with all that money? Have you any idea what the percentage would be that was simply a turnover of existing debt?
Mr. Desautels: I think this particular chapter on the management of the federal debt, if I may say so myself, is quite a clear explanation of how that very large, important expenditure program is managed. In 1995-96 the government will have spent close to $47 billion on that particular program.
We explained in that chapter that the government is moving towards a greater proportion of longer-term debt, moving more towards 60% or more in longer-term debt and the rest, of course, in shorter-term. Right now it's closer to 50% or 55% in longer-term debt, which means close to 50% of the federal debt is in quite a short term and it therefore turns over very rapidly. This is why on average during the year the federal government has to go to the market for about $450 billion. This is simply the turnover of existing debt. It's not really new debt. When you translate it on an average weekly borrowing, you're talking of average weekly borrowings of about $9 billion.
Mr. Grose: Yes, I've no quarrel at all with the chapter. It's quite clear. But the news release is not quite so clear. It concerned me, because as I say, I've had a couple of questions from home about that figure, from people who hadn't understood exactly what it meant.
As long as we have made it clear....
Mr. Desautels: The net increase in the year, let's say from 1995 to 1996, was $40 billion. In one year the gross debt went up by $40 billion.
The Chairman: Thank you, Ivan.
[Translation]
Mr. Rocheleau, five minutes.
Mr. Rocheleau: My first question will be about chapter 37, auditing of large corporations. You stated that a departmental audit of a certain number of large corporations, the exact number having not been specified - if you could do so, I would appreciate it - has shown that $850 million were collected in 1994-95 and an additional $459 million would be collected in the following years. Therefore, that represents a total of approximately $1.3 billion. Are we to understand that$1.3 billion will be collected in addition to what has already been paid? Are we to understand that this $1.3 billion would not have been paid by the large corporations involved, and will there be any penalty applicable when Revenue Canada manages to identify the amounts to be paid by large corporations that have not done so of their own volition? How many corporations are involved out of the 6,000 that you've identified?
Mr. Desautels: Mr. Chairman, first of all, when we stated that there were $850 million per year in new assessments and another possible payment of $459 million in the future, I would like this to be very clear. That does not necessarily mean the government will collect $1.3 billion, because the corporations often appeal the assessment; there can even be negotiations. Therefore, the amount ultimately collected is less than the new assessment.
We also say in this chapter that new assessments are generally issued because of different interpretations of the legislation. One can have many different interpretations of some parts of the Income Tax Act. Naturally, those who declare their own income will often use the most favourable interpretation for them.
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It's the role of the auditor of Revenue Canada to ensure that the legislation is interpreted effectively and in accordance with the legislator's intent. The new assessments therefore often result from different interpretations of the legislation by the Department and the corporations.
Now will there be a penalty? I think that the law allows penalties and interests in certain cases. In fact, we have noted anything that leads us to believe that the Department is not correctly applying the legislation when the time comes to impose penalties and interests. However, there are arrangements and negotiations that can take place from time to time. In fact, we have reported separately on this aspect during other audits conducted in the past.
Mr. Rocheleau: Am I to understand that this is not a matter of tax avoidance or tax strategies that you've discussed in the past? It's another dimension of the problem.
Mr. Desautels: That could be the case. I said that in most cases, these are questions of interpretation. However, the auditor also is supposed to identify cases of tax avoidance. What we're saying in this chapter is that the majority of the amounts identified here can be attributed to different interpretations of the legislation.
Mr. Rocheleau: Does this approximate sum of $1.3 billion come from only some of the 6,000 companies targeted by the program or from all of them?
Mr. Desautels: This amount comes from all 6,000 companies combined. Of course, among the 6,000, there are some for which there was no new assessment. We accepted their tax return as it was filed. I'm not in a position to tell you that of the 6,000 companies, a certain number have not had any new assessment. Obviously, not all 6,000 received a new assessment.
The Chairman: Thank you, Mr. Rocheleau.
Mr. Rocheleau: We must be clear about this. Six thousand businesses are covered by the program.
Mr. Desautels: Yes.
Mr. Rocheleau: Would we be correct in thinking that the Department collected $1.3 billion from 1 800 of these businesses or should we be thinking that 6 000 businesses are contributing this $1.3 billion?
Mr. Desautels: I would imagine that the Department could provide you with some statistics indicating the number of businesses that have made new contributions totalling $850 million for the year. I believe that you could determine that this amount comes from 1 000 or 2 000 new contributions. I could ask the Department whether or not it can provide this information and have it forwarded to Mr. Rocheleau.
The Chairman: We will ask the clerk of the committee to follow up on this for the benefit of all our colleagues.
Thank you, Mr. Desautels.
[English]
Mr. Solberg.
Mr. Solberg: Thank you very much, Mr. Chairman.
To go back to infrastructure for a moment, I was talking about Saskatchewan before my time ran out last time, and I was mentioning that because of the nature of their economy they have a huge infrastructure to maintain, but because of the nature of the Canada Infrastructure Works program, whereby money was allotted partially on the basis of unemployment, provinces such as Saskatchewan would have to send money to other provinces and in effect to some degree subsidize them. Because there are competing goals in Infrastructure Works - one is to create jobs, the other is to provide infrastructure - don't those two goals sometimes work against each other, and shouldn't this be identified as one of the problems with the infrastructure program?
Mr. Desautels: I wonder if you could clarify your question.
Mr. Solberg: Because Saskatchewan has this huge infrastructure problem and it could have used that money in its own province instead of sending it somewhere else, but because it had to do that because the nature of the infrastructure program was that the money was to be doled out on the basis of unemployment rates and Saskatchewan's unemployed rate is quite low, don't we have a situation here where one goal of the infrastructure program, which is to create jobs in depressed areas such as Atlantic Canada or to some degree Quebec, competes with the other goal of the program, which is to provide necessary infrastructure in a place like Saskatchewan where they have tremendous infrastructure problems? And shouldn't that be identified in the report?
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Mr. Desautels: I think that kind of effect, if that's what you're trying to describe, of a program like this should come out, if it is really the case, in a proper evaluation of the program carried out by competent evaluators. We have always preached that government programs should be evaluated on a fairly regular basis to determine if in fact they are being delivered as efficiently as possible, but also to determine if they are achieving their objectives, and conversely, whether or not they're causing negative effects that were not intended.
We've always said, and I'll repeat it now, it's the government's responsibility to evaluate its programs on a regular basis. Some evaluations have been carried out. In fact, one was finished just after we had printed this particular report, and it might be of interest to this committee. It should address the negative effects you have in mind. Whether it will address the specific point you're talking about or not I can't really say. That would be in the judgment of the evaluators.
Mr. Solberg: You always do stress clear, measurable objectives, and I appreciate that and I think it's important, but in this case, isn't it possible - because there are two objectives of the program, not one - sometimes they may conflict? Isn't that potentially a big problem? I've given you one example. If it is a problem, I'm wondering why you wouldn't identify this in your report. I've given you a possible example here, and there may be others.
Mr. Desautels: We did not carry out, because it really isn't seen as a regular expectation of the Auditor General, an evaluation of the effectiveness of the program. We're counting on our own act. Our own legislation really requires us to bring to your attention situations where the government has not carried out proper evaluations of the effectiveness of its own programs. That's what we insist on. In this case we did not say that, because the government promised to carry out a proper evaluation. That evaluation was being carried out. It got completed late, after we had carried out our audit, but I believe it is available for members of this committee to review if you should wish to pursue this particular chapter.
Mr. Solberg: Yes, I would like to see it.
The Chairman: Mr. Hubbard.
Mr. Hubbard (Miramichi): Thank you, Mr. Chairman.
About the big corporations, I'm thinking particularly this week about the banks, which are coming in with astronomical profits for the past year. At the same time the banks have really cut back on their labour force, by tens of thousands of people. In your experience and your observations in other countries, first of all, do the corporation rates of those large profits compare favourably with what happened in Canada ten years ago and with other countries around the globe?
Secondly, is there any possibility that other countries have or may consider that some of these machines that are replacing people in banks could become a subject of some form of taxation? I think of probably tens of thousands of people working in banks who served customers and who lost their work. Now we have these fancy machines. Is there any evidence in any country around the world where these machines themselves are subject to taxation?
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Mr. Desautels: Mr. Chairman, Mr. Hubbard is raising questions about the competitiveness of the Canadian corporate taxation rates. That is entirely a policy issue on which the Auditor General is not meant to comment.
Mr. Hubbard: Has the rate gone down in the last ten years in Canada?
Mr. Desautels: I may just offer this: even though this hasn't been the object of this particular exercise, the corporate taxation rates in Canada are seen to be quite competitive with those of our trading partners. Of course there are some tax havens around the world, and that's not what we're trying to compare ourselves to. When we look at our major trading partners, I think the overall judgment is that our own rates have been quite competitive. They haven't moved much over the last few years.
In fact, if you look at the total intake from corporate taxes in Canada, from a 20-year to 25-year perspective, it's been a smaller percentage of the total income tax collections. That's one way of concluding, perhaps, that our corporate income tax rates certainly haven't been going up or shooting up very significantly. I think our rates are reasonably stable and quite competitive.
This is like a free opinion on my part. We really haven't looked at that in this particular report.
With respect to the second part of your question, as to whether or not we should be taxing physical assets - or production capacity, which is another way of putting it - again, that's very much a policy issue. There is some form of taxation of that. You have taxes on capital, for instance, that are raised particularly by the provinces.
There are already different forms of taxation other than income tax that get at, only in part, the issue you're raising. Fundamentally, you would need to have a good debate about the principle you're putting forward.
Mr. Hubbard: I'd like to move on to the CAATS program.
You identified four software programs the government is involved with implementing. One of them, of course, is the Canadian automated air traffic system, called CAATS.
In terms of your own report, there seems to be a great variation in figures. For example, in 1988 the Treasury Board looked at a cost of about $826 million. Then we find that a contractor bid on this at less than $500 million and a certain amount was set aside in terms of the transport department's on-site management of it or preparation for it. And this has continued to escalate.
Yesterday I asked questions in terms of the project team and project managers. I asked whether or not there had been a changing team or whether there were particular individuals who were responsible for this over a long period of time.
It seems that the company who bid on it certainly bid under the estimated cost to begin with and then has been going back for changes. And probably management has been asking for changes. My question basically deals with the team approach and whether or not they were identified. You mention in the report that there seemed to be a lack of direct involvement by senior management as this progressed through the system. I don't think I'm putting words into your report. I think that's what I read from it.
In terms of those changing or evolving chairs, were there many people involved in a change of project managers?
Mr. Desautels: Mr. Chairman, I'd be quite happy to answer both questions from Mr. Hubbard.
First of all, in terms of the general principle of leadership and involvement, I'd like to draw your attention to paragraph 24.27. I'll read it for you very quickly. We say:
- By contrast, for the first five years of the CAATS project, the project leader and project sponsor
were only minimally involved in the decision-making process. As a result, senior managers did
not take a central role in decision-making.
- In December 1994, the Deputy Minister assumed the role of project sponsor, the Assistant
Deputy Minister assumed the role of project leader and the project adopted a more businesslike
approach.
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To answer the second part of your question, of course at the deputy minister level in Transport Canada a certain amount of movement took place during the duration of the project. In fact, according to my information, from the inception of the project till now there have been five different deputy ministers, including the current one. There was somewhat less movement at the assistant deputy minister level and the project director level. Nevertheless there were at least three different assistant deputy ministers. Similarly, there has been some turnover at the project manager level.
On both counts, I suppose, in the type of leadership and also in the stability of leadership, we do express certain concerns about this particular project.
Mr. Hubbard: Also on paragraph 17.... I'm surprised Mr. Solberg spent his time on infrastructure. In paragraph 17 you talk about problems with the Correctional Service of Canada. I believe you wrote something to the effect that with the applications for parole and the case management system used with prisoners, due direction wasn't given to the intensity of the difficulty the person presented to society. Rather, the people working there seem to be involved with everyone, without any priority of work. They spend hours working on people involved with minor offences and forget to deal with some of the major ones. Is this a case of management not properly defining work, or what exactly happened in the parole system?
Mr. Desautels: In our report we point to difficulties in organizing and managing the work of the caseworkers within the Correctional Service. We did obviously point out some difficulties in getting the information to prepare the offenders for release on parole. The fact that they were having difficulty at that end had two consequences. One was that it could lead to some parole decisions, or parole recommendations, that are based on less than complete information, with the risk to public security or public safety that might involve.
The other consequence we raise in the chapter is that particularly for people on shorter sentences they were rarely able to be ready for the parole hearings at the one-third mark of the sentence, with the result that some of the parolees who were not dangerous offenders were not let out on parole as quickly as they should have been, and that created a bigger caseload for the caseworkers to deal with and took away from them their ability to deal with the more serious cases.
So it's a double-barrelled effect and we think it's quite a serious situation. But we've been given assurances by the management of the Correctional Service that they are accepting our criticisms and will be working on them.
The Chairman: Thank you, Charles.
[Translation]
I have a short question for Mr. Desautels.
I did a little bit of accounting, although this is not my bailiwick. In your last three reports, the one tabled yesterday and the reports tabled in May and September, you mention, among other things, that $2.5 billion have been wasted.
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This report discussed issues such as Public Works poor stock management, $1.25 billion; the poor management of information technology programs, $1 billion; the improvement of productivity at the Department of Defence, $200 million; the improvement of disability under the Canada Pension Plan, $42 million; the improvement in collecting interest owed to the State, $17 million; Parks Canada improved management of the canal system: $10 million; and a delay in modernizing the army airbus, $8.5 million.
At a time when money is becoming an increasingly rare commodity, at a time when Canadian households are tightening their belts, at a time when the Department of Health announces that1.4 million in Canada are living in poverty, waste in the order of $2.5 billion is enough to make your hair stand up on end.
Yesterday the Official Opposition questioned the President of the Treasury Board who was quoting from your report out of context and who was interpreting your comments as being complimentary, stating that you were bragging about him because everything was going so well. I would like to hear your comments on paragraph 23.92 of your report, where you state:
- 23.92 Since 1980 we have identified significant deficiencies in material management practices.
This audit has confirmed that many of these deficiencies still exist.
Mr. Desautels: As you know, when we draft a report, we do so with great care and we weigh our words. You were quoting the conclusion given in Chapter 23 on Material Management. That chapter describes the real situation. It is true that we conducted an audit in 1990 and that today, in 1996, we still have many of the same problems identified back in 1980.
I think that we have a serious situation with respect to material management. The examples we gave in this chapter are not extreme; it is quite clear that we are spending a great deal of money to store and handle excess inventory in stock. Our report also has some positive things to say about certain programs. Nevertheless, I would say that material management cannot be included in those programs that are managed properly. Personally, I think that this issue requires immediate attention and that is why I would encourage the committee to examine it as quickly as possible.
The Chairman: Thank you. Five minutes, Mr. Rocheleau.
Mr. Rocheleau: My question or comment will deal with the first topic you discuss in your press release and in your document today, namely, accountability.
You talk about the federal government's need to improve accountability, given that we may very well be overwhelmed by the changing nature of the government because of:
- ... in the growing number of joint programs involving the federal government and other partners
where accountability can become diffused.
Did we not miss a golden opportunity to demonstrate this transparency? Is this a little bit what you had in mind when you talked about institutions? How was the Standing Committee on Public Accounts treated? How did the Chairman of the Standing Committee on Finance treat us?
.1650
Where is the Office of the Auditor General going with the accountability process? Are people following your recommendations? Do you get the impression that, as far as family trusts are concerned, the Canadian government has been accountable to Canadian taxpayers as it perhaps should have been in the wake of your revelations?
Mr. Desautels: I raised the first topic, namely the need to improve accountability, because of, and this is particularly true as we speak, the changes occurring in the delivery of government services. More and more often we are looking at alternative ways to deliver services. And this trend towards alternatives is creating a challenge for us, because accountability is not as clear-cut as when the government does everything. This trend gives us an opportunity to clarify things properly.
When working with partners, one must necessarily reach an agreement with one's partner as to who is responsible for what, who delivers what and how we're going to measure whether or not the final product corresponds with what we had agreed to. Accordingly, the new delivery methods that we see now provide us with an opportunity to spell out the accountability relationship within the federal government. This problem has been around for a long time, but this change which we appear to be going through provides us with an opportunity to take action and to do something.
I also mentioned that I do not usually suggest that parliamentarians examine new legislation, because that is their role. However, I would point out that in other jurisdictions, in this sector, legislation has been clear with respect to accountability. I gave the example of Alberta, which recently took action on this. It appears that this legislation is yielding some interesting results. Just prior to this, the United States adopted legislation as well which makes public service managers accountable for their results. We can therefore base ourselves on some current examples that are available to us.
You referred to the matter of family trusts. I do not want to comment on this subject. Two committees have examined this issue and prepared reports. Since I am here to serve the members, I must, at the end of the day, accept the conclusions reached by the members of Parliament. I take comfort in the fact that the problem we raised was debated openly, by parliamentarians and other observers, and, at the end of the day, the Minister of Finance chose to amend the Act and to clarify certain points which had created problems for us. I therefore consider the matter closed. Over the next few months, we will be examining other issues.
The Chairman: Thank you, Mr. Desautels and Mr. Rocheleau.
[English]
Mr. Solberg.
Mr. Solberg: Thank you very much, Mr. Chairman.
My question has to do with Correctional Service of Canada. I am concerned, in light of media reports today, that this is an extremely serious problem, perhaps even a deadly problem in some cases. You've indicated that the Correctional Service has heard your concerns and will take them seriously. But because of the tremendous risk it potentially puts the public at, I'm wondering if you could help me understand this a little more.
.1655
We have a situation here, as I understand it, where the Correctional Service of Canada is having problems getting information from the provinces in some cases. Therefore, the parole board may not have all the information it needs to make decisions about the future of these offenders. Is that roughly correct?
Mr. Desautels: Yes, it is almost correct. You say the parole board doesn't have the information, but the caseworkers at Correctional Service of Canada are supposed to accumulate that information and use it in formulating their own recommendations to the parole board.
Mr. Solberg: The media is alleging, in a particular case, that somebody who turned out to be quite dangerous was released into the public because this information was missing. We spoke a minute ago about accountability. Considering what's at stake here, I'm wondering what measures could be built into the Correctional Service of Canada to emphasize the tremendous responsibility these caseworkers and the parole board have so if there is a mistake made there is some accountability. They can't just say they made a mistake, they didn't have all the information and the person got out and killed someone. That's simply not acceptable.
Is there some recommendation your department can make to ensure that these caseworkers or somebody in the department somewhere is held accountable for these decisions that in some cases lead to the death of innocent people?
Mr. Desautels: This is a terribly complex issue.
Mr. Solberg: I appreciate that.
Mr. Desautels: We have on the one hand the notion of accountability, which is very important. On the other hand we have the notion of managing risks in a very tricky area where it's impossible to be right 100% of the time.
Mr. Solberg: I don't disagree with that.
Mr. Desautels: It's a very complex situation. I guess there is some real accountability. In fact, as you know, the previous commissioner of the Correctional Service of Canada resigned over a particular incident. I think that's an example of some sort of accountability over the process.
Mr. Solberg: That was on an ad hoc basis, though.
Mr. Desautels: You're right. I just want to make sure people understand that this is quite a difficult area to work in.
Mr. Solberg: I agree it's difficult to judge risk. I accept that and I think we all accept that. It's unacceptable when it's not a case of risk but a case of negligence because someone made a decision without having all the information. So there was negligence at some step in the process and somebody should pay for that negligence because somebody on the outside paid, allegedly, with his or her life.
Mr. Desautels: I agree with Mr. Solberg on the principle that if a mistake is made it should not be attributable to an administrative error. I think we should be able to do that part properly. We should be able to prepare the cases in time with the right information. As I indicated, even if you do that it's possible once in a while to leave somebody out on parole who may do something very regrettable. But let's make sure that is not done as a result of a lack of documentation or information.
Mr. Solberg: Will the Correctional Service of Canada be bringing forward some recommendations on accountability as part of its response to your criticism?
Mr. Desautels: I don't have a specific answer to that, although we have had some commitment from the Correctional Service to work on each one of our recommendations. I think it would be a good question for this committee to put to it.
I just have one more piece of information for Mr. Solberg. I'm told that all violent incidents in the community committed by people who are on parole are automatically investigated. They're not just written off as unfortunate things. There are investigations for all violent incidents committed by people on parole.
.1700
The Chairman: Mrs. Barnes.
Mrs. Barnes (London West): Thank you very much, and welcome. I look forward to going through these reports in detail.
You've piqued my interest in the Correctional Service report, because for a couple of years I worked on our justice committee, and I know the pressures on dollars that flow not only for the Correctional Service of Canada but for the provinces. In your response to one of the earlier questions you talked about the pressure on the system. Rather than focusing on the high-risk offender, which my colleagues have done, I want to talk about the implications, and dollar implications, for the low-risk offender, the guy or woman who is in prison for short-term periods and what that means in lost revenues...having to spend to keep people in, and what it means for their programming.
In particular, I have an interest in the issue of double-bunking and how that creates pressure. I'm not sure if you go specifically into the double-bunking issue, but I know what that type of environment would do to most people. I've been in those cells across this country. I'm just over five feet tall, and if I reached out my arms I could touch the walls of the cell; and a cell is now housing two inmates for nearly a third of our prison population in the federal institutions, at least in some of the provinces.
My statistics might be slightly out of date, but it certainly costs a lot more to keep somebody in one of these institutions than outside, on parole. When you're not getting the programming in time to get them ready even to hear that assessment.... I think there are some paragraphs in here about how many millions of dollars this is costing us.
I would like to hear both sides of this argument, because I know there are two sides, and I think both sides are critical, because they both lead to the problem.
Mr. Desautels: Mr. Chairman, Mrs. Barnes is correct that we also have to remember to deal properly with the low-risk offenders, because they do have an impact not only on the cost of the service but also on the availability of caseworkers to work on the more serious cases. We have indeed raised that in this particular chapter, as one of the dimensions of the problem.
Mrs. Barnes also raised the issue of double-bunking. In 1994, Mrs. Barnes, we looked at the custodial part of the Correctional Service of Canada mandate. We have reported on this, and in fact the public accounts committee did hold hearings on that particular chapter at the time and had some discussions on it. So there is evidence on the record dealing with that particular issue.
Mrs. Barnes: I would also like to follow up on what the cost is per month. I think it's on page 30.17 of your report. I want to make sure I'm correct that you're saying, as Auditor General, the total cost to keep an offender in an institution versus the community is approximately $3,800 per month. Am I reading that properly?
Mr. Desautels: You're reading it quite correctly, That's in paragraph 30.35.
Mrs. Barnes: A lot of people don't believe there's a cost to us to keep low-risk offenders in an institution when as far as I'm concerned we really need to put more dollars into the programming for those high-risk offenders who are sometimes slipping through the cracks. I don't want to see them out on the street before they've had all their programming. I know, from talking to these people who have to be the decision-makers, they don't even want to look at a lot of these people having their hearings. I know hearings are sometimes passed over and rejected because you know what the answer is going to be if you haven't had the programming, even if you're a low-risk offender.
It's $3,800 per person, and how many of these are falling through the cracks? Have you taken a look at that in this report, or are you going back? I was serving on the justice committee when you were doing the other report for this committee.
Mr. Desautels: I think in our report we've taken as an example the Ontario region, and we say there that 900 parole hearings were waived or postponed because of incomplete release plans, treatment, or programming. That's just one of the reasons. So you are already in a position to develop an appreciation of the significance of this.
.1705
Mrs. Barnes: Thank you very much.
The Chairman: Mr. Grose.
Mr. Grose: My colleague just addressed my main point, and it was most adequately answered by the Auditor General. But I just have a short question, and you may consider you have answered it.
Did you find any evidence that because of the overcrowding we've let one out the back door to get the new one in the front door? Could this be one of the reasons why the documentation is not catching up with these people? They really are being released, in some cases, before we would release them if we had ideal conditions.
Mr. Desautels: Overcrowding in some institutions is a problem. As I said, we talked about it in our 1994 chapter on the custodial role. But we don't think it is really a factor contributing to the problems we are raising now concerning the preparation of detainees for parole hearings.
I think what is more the issue is Correctional Service Canada has to bring as much top management attention to this part of their mandate as they are giving to the custodial part of their mandate. I think if we saw a shift to even things out a bit, you probably would see the reintegration part of the mandate handled better.
Mr. Grose: Thank you. This is exactly what I wanted to know.
Thank you, Mr. Chairman.
[Translation]
The Chairman: For my colleagues' information, the bells will sound for 30 minutes because this was an unexpected vote. We can therefore continue with our meeting. I have two questions and I will put one of them immediately.
Two or three weeks ago, Mr. Peter Harder, the Treasury Board Secretary appeared before us. He reacted rather humorously to an expression I used regarding him. I told him that his role of Secretary of Treasury Board gave him the power to a certain extent to ``terrorize'' departments that were late in applying their monitoring measures or efficient performance indicators. I realize that, given the reputation that I am apparently acquiring with Treasury Board, I perhaps ``terrorized''Mr. Harder, and I apologize. That was not what I was trying to do, even though he has to be accountable.
I therefore want to talk about the accountability of senior officials. You broached this topic in answer to one of Mr. Rocheleau's questions. Within the government or the government machinery, there is a tendency to easily lay blame on the lower or inferior levels. I do not use the word ``inferior'' as opposed to ``superior''; I'm referring to the lower levels of management or operations. In other words, it is easy to lay blame on the levels below oneself; that is a normal human reflex.
In terms of senior officials' accountability, what could we do to correct some very stupid decisions? Today, during question period, I put a question to the President of Treasury Board. I told him that in 1995, a Newfoundland shipyard, whose bid was $71 less than its closest competitor, was awarded a contract to refit a coast guard vessel. However, the Coast Guard had forgotten to include the costs of moving the vessel, which was in Dartmouth, Nova Scotia, to Newfoundland - more than $30 000.
Thirty thousand dollars was thus spent to save $71. When something that stupid happens within the system, someone should be accountable. Who is accountable, Mr. Desautels?
Mr. Desautels: Allow me to answer your question in two ways.
First, you mentioned the Secretary of the Treasury Board and his role with respect to departments. Personally, I think that is a subject that needs to be debated.
.1710
We are currently participating in ongoing discussions with the Secretary of the Treasury Board regarding the scope of his role as a leader and how he should be providing guidelines and ensuring that they are followed.
It would be useful to clarify the expectations of members of Parliament with respect to the Secretary of the Treasury Board on that particular point. This clarification would be of immense value for my work because it would give me a reference point in order to better evaluate the accountability of the Secretary and the individual departments on interesting and very important issues.
Now, how can one demand accountability once gaps are identified within departments? I think it is essential that objectives and expectations with regard to the heads of various departments be clearly set down. Currently it is difficult to demand a clear accountability because there is no scale for evaluating the performance of the department or the department's heads. This challenge has been around for a long time and it is worth meeting as quickly as possible.
Other public administrations have developed mechanisms to ensure better accountability on the part of senior officials. Great Britain and Australia, for example, are well ahead of us in that area. Work needs to be done in this field.
Now, we will not be able to solve everything. Parliamentarians will have to make some decisions on principles that are quite fundamental in the Canadian parliamentary system. As an example, the notion of ministerial responsibility is a very important principle that you will have to take into account when dealing with the accountability of officials in a given situation.
I gave a long answer to your question, but I think that within the framework of the present parliamentary system, it is crucial to establish better performance contracts with the various departments and to utilize this kind of contracts to assess the performance of various deputy ministers or assistant-deputy ministers.
The Chairman: Mr. Rocheleau.
Mr. Rocheleau: My question deals with the intelligence services. You have made a first audit within the intelligence community, which in practice is made up of the secret services, certain services within the Department of National Defence and, if I'm not mistaken, the Communications Security Establishment, and perhaps as well - I would like to hear it from you - the Royal Canadian Mounted Police.
As we know, the Communications Security Establishment reports to the Prime Minister's Office. What mechanisms exist in order to protect citizens and taxpayers against any abuse, against the fact that the tap could run with no end in sight if ever the Canadian State was to become wicked? Are there some parameters in order to protect the public interest?
What kind of a control do we have as parliamentarians? For me, your chapter on this raised more questions than it gave answers. In my opinion, we are opening a trap door giving access to a secret world. Indeed, the phrase ``secret service'' says it all. What kind of protection do we have as citizens against potential abuse, if it is not already occurring?
.1715
Mr. Desautels: That is precisely what we have tried to describe in that first audit being done on these activities. There is a set of mechanisms that are in place today and which, in most cases, seem reasonable to us. For example, the Canadian Security Intelligence service is overseen by an organization that is assessing its performance on a continuous basis. As well, an inspector general has just been appointed for the Communications Security Establishment, which does not quite duplicate the role being played by the Security Intelligence Review Committee.
So there are mechanisms in place. We have suggested some improvements to these mechanisms in our chapter. Hopefully, we are providing parliamentarians with enough information on this subject for them to judge by themselves whether they have enough control, as parliamentarians, on this kind of activities.
Now, as I said, opinions can vary on this subject. It is quite a sensitive area. I believe that the chapter that we have prepared shed some very good light on this issue and will allow you to debate another question that is more a political issue, that is whether you would like to have more or less control.
[English]
Mrs. Barnes: Could I get some clarification, Mr. Chairman? The bells have been ringing for15 minutes and now they've stopped. If there was a vote I would have liked to have attended it.
[Translation]
The Chairman: We will adjourn. The bells have stopped ringing. Since the vote was unexpected, the bells rang for 30 minutes,
Mr. Desautels, Mr. Dubois and Mr. Rattray, thank you very much for your excellent co-operation.
The Standing Committee on Public Accounts stands adjourned to the call of the Chair.