Identifying eligibility

6.21 Aboriginal Affairs and Northern Development Canada should review its community eligibility criteria for the Nutrition North Canada program to base the criteria on need, and it should assess the eligibility of communities accordingly. (6.17–6.21)

 Agreed. At the launch of the Nutrition North Canada program in 2011, a community was eligible for the Program if it lacked year-round surface transportation (that is, no permanent road, rail, or marine access), and used the Food Mail Program, Aboriginal Affairs and Northern Development Canada’s previous northern transportation subsidy program. Usage levels were determined from an examination of the Canada Post shipping data from the 2009–10 fiscal year. Our internal audit and internal evaluation in 2013 recommended that community eligibility requirements be examined. The Department has been examining this matter for a year, conducting a detailed review of all isolated northern communities to better understand the challenges they face due to isolation in accessing healthy, nutritious foods at affordable prices. This review will assist the Department in reassessing community eligibility for maximum program effectiveness.

The Department will complete the first phase of a detailed review of all isolated northern communities to better understand the challenges they face due to isolation in accessing perishable, nutritious foods in the first half of 2015.

·         Remote communities in three territories and seven provinces were examined, including their year-round access to approximately 30 supply centres.

·         A common template and criteria were developed to allow for comparison of data collected, such as: community demographics, the number of grocery stores in each community, amount of time isolated, nature and condition of surface access when it exists and distance to supply centre by air.

·         Information will be posted in the summer of 2015 on the Program website to seek feedback on the assumptions.

·         Recommendations on community eligibility will be developed.

Passing on the subsidy to consumers

6.29 Aboriginal Affairs and Northern Development Canada should review the obligations and requirements in contribution agreements under the Nutrition North Canada program to clarify that retailers must provide all the information on eligible items, including current profit margins and profit margins over time, to determine whether the retailers are passing on the full subsidy to consumers. (6.23–6.28)

Agreed. Aboriginal Affairs and Northern Development Canada is conducting a review of Nutrition North Canada program requirements for retailers, as set out in the funding agreements. The contribution agreements will be amended to specify that they will make available information on current profit margins and profit margins over time to the Department and to compliance reviewers so that the Department may verify that the full subsidy is passed on to consumers.

6.37 Aboriginal Affairs and Northern Development Canada should

·      clarify the requirements for conducting compliance reviews by specifying that the work to determine whether the full subsidy is being fully passed on to consumers must include an examination of current profit margins and profit margins over time;

·   assess the compliance reviews to determine that appropriate review work was completed and that the conclusions in the reports are clear and well supported; and

·   in cases where compliance reviews make recommendations to retailers, formally monitor the implementation of the recommendations. (6.30--6.36)

Agreed. Aboriginal Affairs and Northern Development Canada will amend the Statement of Work for compliance reviews so that these reviews incorporate an analysis of retailers’ profit margins. Compliance reviews will report on whether, based on analysis of the application of the subsidy and the resulting calculations of profit margins of eligible items, the full subsidy is passed on to consumers.

The Department will monitor the work of the compliance reviewer to ensure that requirements in the Statement of Work are met. This may include reviewing the compliance reviewer’s working papers.

In cases where compliance reviews make recommendations to retailers, the Department will monitor their implementation.

·         External auditors undertaking annual compliance reviews are required to obtain   evidence that allows for the examination and analysis of the profit margin to provide assurance that the full subsidy is being passed on to the consumer.

·         Compliance reviews will be undertaken on a risk based approach.   

·         The compliance reviews being conducted in 2014-15 were refined to focus on this issue.

·         The Department will provide quality assurance by assessing the compliance reviews to determine that the work was comprehensive and the conclusions in the reports are clear.

·         The compliance reviews will include action plans and letters to the Recipient where required. Finalized reviews and action plan will be posted on the departmental website and progress will be monitored on an annual basis.

Managing the Program

6.49 Aboriginal Affairs and Northern Development Canada should review and update its performance measurement strategy. The strategy should ensure that performance indicators allow the Department to manage the Nutrition North Canada program to meet its objective, collect data to report against the indicators, and clearly specify responsibilities for data analysis and reporting. (6.39–6.48)

Agreed. A performance measurement strategy for the new program was developed and approved as part of obtaining the Nutrition North Canada program authorities in 2011. Following an internal evaluation of Nutrition North Canada in 2013, Aboriginal Affairs and Northern Development Canada reviewed and updated the Nutrition North Canada performance measurement strategy and associated indicators in 2014. It was approved and issued in September 2014.

·         The approved Performance Measurement Strategy was posted to the Program’s website on November 21, 2014.

·         The Department will review and refine the Performance Measurement Strategy annually.

·         The Performance Measurement Strategy on the Program website will be linked to the Program Results section so that results can be monitored and assessed effectively by all stakeholders.

6.55 Aboriginal Affairs and Northern Development Canada should consider all options in implementing its cost containment strategy. (6.50–6.54)

Agreed. Aboriginal Affairs and Northern Development Canada will continue to apply cost containment in a manner that supports the program objectives. In the evaluation of cost containment, the Department will examine all options, including annual changes to the subsidy rates, with a view to avoiding unintended price shocks or product shortages. Competitive freight rate information will be considered in any adjustment to subsidy rates.

·         On November 21, 2014, the Department announced that the Government of Canada and the Nutrition North Canada Advisory Board would be engaging Northerners, retailers and suppliers on ideas to keep the Program on a sustainable path.

·         A phased approach to engage key stakeholders has been developed to: communicate Program objectives, information and the requirement for Program adjustments to keep it on a sustainable path; better understand what foods Northerners want subsidized; and, enable cost-effective, inclusive and continuous feedback that promotes two-way communication between the Program and stakeholders. Consultants will assist with this work.

·         The Department will examine all options for cost-containment in 2015-16, taking into account stakeholder feedback.

·         Any program adjustments, including annual changes to the subsidy rates, will be communicated well in advance, to take into account the sealift and winter road planning cycle with a view to avoiding unintended price shocks (e.g., poultry, processed cheese products) or product shortages.