PACC Committee Report

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INTRODUCTION

BACKGROUND

OBSERVATIONS AND RECOMMENDATIONS

CONCLUSION

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Pursuant to Standing Order 108(3)(e), the Standing Committee on Public Accounts has the honour to present its

FIFTEENTH REPORT

The Standing Committee on Public Accounts has considered Chapter Two (Fisheries and Oceans Canada — Contributing to Safe and Efficient Marine Navigation) of the December 2002 Report of the Auditor General of Canada and has agreed to report the following:

INTRODUCTION

The Department of Fisheries and Oceans (the Department, DFO) has an extensive mandate that includes responsibility for ensuring that marine navigation in Canadian waters is both safe and efficient. This aspect of its mandate is delivered by the Canadian Coast Guard, which was transferred to the Department in 1995 from Transport Canada.

Two areas of the Coast Guard’s activities are devoted to safe and efficient marine navigation: navigational support services and boating safety. These activities focus on prevention, and include the provision of the following services: marine navigation and traffic services; aids to navigation; channel maintenance; navigable waters protection; navigational charts; and, regulation of recreational boats and boaters.

Providing these services is costly. In 2000-01, preventative activities cost approximately $220 million. At the same time, DFO recovered about $30 million in maritime service fees charged to commercial shippers.

Because of the importance of maintaining safe and efficient Canadian waterways and the significant cost involved in doing so, the Committee decided to examine the results of an audit of the Department’s management of these services and activities that appeared in the Auditor General’s December 2002 Report. Accordingly, the Committee met with witnesses on 19 February 2003 to review the audit findings and corrective measures that had been taken. Mrs. Sheila Fraser, Auditor General of Canada, Mr. John O’Brien, Principal, and Mr. Kevin Potter, Director, Audit Operations Branch, appeared on behalf of the Office of the Auditor General of Canada. Mr. Jean‑Claude Bouchard, Associate Deputy Minister, represented the Department of Fisheries and Oceans. Ms. Ursula Menke (Deputy Commissioner), Mr. Jacques Lorquet (Director, Navigational Systems), Mr. Steve Troy (Director, Safety and Environmental Response Systems), and Mr. Glen Condran (Acting Director, Planning and Performance Measurement) appeared as witnesses for the Canadian Coast Guard.

BACKGROUND

Fisheries and Oceans Canada is authorized by section 40(2) of the Oceans Act to provide Coast Guard and hydrographic services to “ensure the facilitation of maritime trade, commerce, and safety.” The Canada Shipping Act gives the Minister of Fisheries and Oceans the specific responsibility for providing aids to navigation and vessel traffic services, and regulating pleasure craft operation.

The Department delivers these services through the Canadian Coast Guard, which includes the Office of Boating Safety and the Canadian Hydrographic Service. The Coast Guard is organized into five regions, each one of which operates differently than the others. This gives the regions the flexibility to tailor their activities to unique regional needs. This flexibility extends to the use of resources; regions can redirect budgets from national to regional issues, depending on priorities.

Aspects of marine navigation have been examined by previous audits. In 1983, the Auditor General looked at this subject in relation to an audit of the Marine Transportation Program. At that time, the Coast Guard was part of Transport Canada. The Auditor General commented that he had “found weaknesses in the Coast Guard’s planning, operations and the information used to manage its marine navigation activities.”[1] Audit results indicated that annual cost savings in the range of $10 to $20 million were available if the Coast Guard completed its Lighthouse Automation Program (started in 1971, but put on hold), revised its standards for checking and maintaining buoys, and increased the automation and consolidation of its radio stations.[2] The audit also determined that:

In many areas such as buoys and lighthouses, the Department lacks adequate cost information to allow managers to decide whether a given type of aid or a given district is being operated in the most efficient manner.[3]

A 1989 audit reviewed the management of the Coast Guard fleet, aids to navigation and icebreaking.[4] This audit examined issues not directly related to those involved in the current audit. However, it did find that the Coast Guard still did not have a fully functional system capable of producing an accurate and timely set of integrated financial and operating reports to guide management decisions. The Coast Guard had been working on developing such a system since 1983. The audit also found examples of new technologies that had been developed in individual regions with little cross-fertilization of these ideas among regions.

In 2000, the Auditor General audited the Department of Fisheries and Oceans’ management of the Coast Guard fleet. This audit found that the Coast Guard’s five regions used different practices and procedures to manage its fleet of vessels. The audit pointed to problems in key management practices with regard to cost-effective management of the fleet that included the following:

·       The Department [had] not established clear, concrete, realistic and agreed-upon performance expectations for the fleet.

·       Internal budgetary processes [did] not support accountability for the fleet activity.

·       Information systems [were] not integrated and [did] not provide managers with reliable, timely information on performance and cost.

·       Shore-based support [was] too large, given the current size of the fleet.

·       There [were] weaknesses in stewardship reporting to Parliament.[5]

The Committee reviewed these findings in October 2001 and tabled its report (22nd Report, 37th Parliament, 1st Session) on 22 May 2002.[6] In part, it determined that an awkward management model stood in the way of efforts to better manage the fleet. It recommended that the Department review its management model, develop a range of options for changing it, and provide the details in its report on plans and priorities, 2003. The government agreed to this recommendation, indicating that such a review had already been conducted and an option chosen.

The Department identified what it has labelled the “Departmental Model Enhanced” as its preferred management option. This model consists of a formalized approach to planning and accountability, stronger functional direction from headquarters, standardized shore operational organizations and activities, and a zonal approach to program delivery.

Changes at the headquarters level have followed. In April 2000, the Coast Guard’s headquarters were reorganized. New staff with backgrounds in business planning, and performance measurement and reporting have been hired. Support for more coordinated planning, performance measurement, and improved resource allocation has been obtained from the regions. A Coast Guard modernization initiative was begun in 2001 and is made up of:

·       Fleet Management Improvement.

·       Integrated Technical Support Strategy;

·       Marine Aids Modernization Vision 2001 (continuation of an earlier initiative); and

·       Electronic Navigation.

Although this approach is appropriate, none of its elements have been fully completed and one element (Electronic Navigation) was not yet developed at the time of the 2002 audit. That audit (whose results are contained in Chapter 2 of the Auditor General’s December 2002 Report) found that the Department still needed to modernize its navigational support services and boating safety activities and to deliver them cost-effectively. Mrs. Fraser summed up the barriers that are preventing the Department from doing so:

·       failure to ensure that there is one national program,

·       regional operations that are not held accountable for implementing national policies and meeting international obligations,

·       key elements not present to ensure accountability,

·       inadequate integration of navigational support services,

·       provision of a service that does not contribute to the mandate for safety and efficiency, and

·       outdated legislation used for unintended purposes.

OBSERVATIONS AND RECOMMENDATIONS

The Committee acknowledges that the Canadian Coast Guard operates in a difficult and rapidly changing environment. The Coast Guard has had to deliver vital services while undergoing a merger with the DFO fleet and experiencing reductions in its funding. It is to the credit of the men and women serving in the Coast Guard that they have continued to address their responsibilities throughout a difficult period. The Auditor General’s observation that users of Canada’s navigational support systems generally consider that services provided by the Coast Guard support safe waterways and meet their navigational needs is evidence of this. Nevertheless, audit results clearly show that the Coast Guard’s ability to deliver its many services in the area of marine navigation and boating safety is being severely strained and that prompt action is required.

The Auditor General made six recommendations designed to help the Department modernize its marine navigation and boating safety activities, to deliver these services cost effectively, and to reduce barriers to change. The Committee firmly endorses these recommendations and welcomes the Department’s commitment to implement them. The following table lists the Auditor General’s recommendations along with the Department’s response:

 

RECOMMENDATION	RESPONSE
2.53 The Canadian Coast Guard should ensure that there are up-to-date national policies, standards, and levels of service expectations for its navigational support services. It should also develop the capability to monitor the implementation of these policies, standards, and expectations.	The Canadian Coast Guard’s Headquarters Renewal Initiative is now complete and Headquarters staff, in co-operation with their regional colleagues, will develop a plan to update all national policies and standards. Finally, the Coast Guard will develop a quality assurance function to regularly monitor the implementation of the policies, standards, and levels of services. These measures will be implemented over many years.
2.68 For its navigational support services and boating safety activities, Fisheries and Oceans Canada should do the following: ·         complete the implementation of its results-based management and accountability frameworks; ·         establish clear, measurable, concrete targets for the identified outputs and immediate outcomes for each framework; ·         identify who is accountable for achieving targets and managing resources;	The Coast Guard began the development of results-based management and accountability frameworks and will continue these efforts in 2003-04. Once fully developed, the Coast Guard plans to implement these frameworks on a national basis.
·         align budgeting and resource allocation with the frameworks; and ·         develop or identify sources of information to measure results.
2.73 The Canadian Coast Guard should complete and implement its draft guidance on risk management	The Coast Guard is developing a risk management policy framework and management tools on risk management in order to integrate risk management principles and concepts in the decision-making process. The Coast Guard is also in the process of developing risk assessment tools. These tools will be used to assess risks in selected waterways starting in 2003-04.
2.77 Fisheries and Oceans Canada should develop and implement strategies to modernize and integrate the delivery of its navigational support services to meet user needs	As noted in the chapter, the Department has started a number of initiatives to modernize the delivery of its navigation support services and other Coast Guard services. The implementation of comprehensive risk-based methodology and completion of the business planning processes will ensure greater integration in service delivery. More detailed action plans with implementation dates will be completed.
2.90 Fisheries and Oceans Canada should develop and implement an overall strategy for the future of its light stations considering maritime safety and heritage objectives.	The Department will complete the review of the staffed light stations by 2003. In addition, the Department will continue the assessment of its entire light station portfolio and define specific measures for the disposal or rationalization of light stations that are not required for operational reasons.
2.98 Fisheries and Oceans Canada should gather and monitor information on boating safety to assess the adequacy of third party delivery, determine the extent of compliance with regulations, and review the adequacy of the resources provided to this program	The Coast Guard will respond to this recommendation through the continuing development of its results-based management and accountability frameworks.
Source: Office of the Auditor General, Report of the Auditor General of Canada, December 2000, Chapter 2.

While the Auditor General was pleased with this response, greater specificity is now called for. A detailed action plan is needed so that the Department can fulfil its commitments in an orderly, timely, and methodical way. As noted above, many of the problems highlighted by the audit have been identified previously, some of them as long as 20 years ago. An enhanced commitment is needed to assure the Committee that tangible actions will be forthcoming. The Committee therefore recommends:

RECOMMENDATION 1

That the Department of Fisheries and Oceans submit a detailed action plan in response to the recommendations contained in Chapter 2 of the December 2002 Report of the Auditor General of Canada. This action plan must take into account, as well, recommendations made by the House of Commons Standing Committee on Public Accounts, include target implementation and completion dates for each action, and be tabled with the Committee no later than 30 September 2003.

If this action plan is to be truly useful, it must be supported by rigorous performance measurement and reporting. Such actions are needed so that Parliament can monitor progress made by the Department, compare it against its plans, and hold the Department to account for the outcomes. The Committee accordingly recommends:

RECOMMENDATION 2

That the Department of Fisheries and Oceans include the Auditor General’s recommendations and its action plan in response in its departmental performance report for the period ending 31 March 2003.

RECOMMENDATION 3

That the Department of Fisheries and Oceans develop a series of indicators to measure performance regarding implementation of its action plan for inclusion in its departmental performance report for the periods ending after 31 March 2003.

RECOMMENDATION 4

That the Department of Fisheries and Oceans begin to report the outcomes achieved through implementation of its action plan beginning with its departmental performance report for the period ending 31 March 2004, and in each performance report thereafter until the identified shortcomings have been resolved.

The Department also needs to improve the scope and quality of the annual performance information that it provides to Parliament. The Auditor General writes that the Department’s recent reports “reflect a lack of direction in reporting performance” for activities intended to contribute to safe and efficient marine navigation. She adds that:

Although the programs have been stable, the nature of the [performance] indicators changes annually. The Department has steadily scaled back the data presented, and the quality of analysis has subsequently deteriorated.

This shortcoming must be addressed so that Parliament can accurately assess the Department’s performance and its requests for appropriations. The Committee therefore recommends:

RECOMMENDATION 5

That, for its activities in the area of marine navigation and boating safety, the Department of Fisheries and Oceans select a permanent set of performance indicators, provide a complete range of data and improve the quality of analysis, for its departmental performance reports, beginning with the report for the period ending 31 March 2003.

The Committee is deeply concerned about the lack of progress in resolving problems identified as long as 20 years ago. The enormous risks associated with these problems — to human health and safety, to trade and commerce, to the livelihood of communities and individuals — are such that urgent corrective measures are badly needed. For the Department to say that “these measures will be implemented over many years,” as it does in response to the Auditor General’s first recommendation, is not good enough. The Committee therefore recommends:

RECOMMENDATION 6

That the Department of Fisheries and Oceans assign a high priority to the timely resolution of problems identified by the Auditor General of Canada in her audit of its services in support of safe and efficient waterways.

The Committee expects that this sense of urgency will be reflected in the timelines established in the Department’s action plan.

The Department’s difficulty in matching available funding with its areas of responsibility was of concern to the Committee. In her report, the Auditor General indicates that some areas of activity are under-funded. For example, she reports that:

The Coast Guard recognizes that its aids to navigation funding requirements exceed the resources available. It has had to obtain funding from other sources within its own budgets or delay aids to navigation service delivery.

Later on, Mrs. Fraser reports the existence of shortfalls of between $4 and $7 million in the base funding for the Office of Boating Safety over the last three years. The Department had to cover these shortfalls by reallocations from within its budget and that of the Coast Guard. Mrs. Fraser also reported that in March 2001 the Department obtained $14.4 million in supplementary funding over two years so that its Canadian Hydrographic Service (CHS) could bring surveys of Canadian waterways up to international standards, make charts compatible with modern electronic navigation techniques, and clear up a backlog in Notices to Mariners (a source of information on critical changes to navigational risks on waterways). In contrast, the CHS has estimated that it will need $49.5 million over five years to adequately address these issues.

The recent (2003) Budget allocated $94.6 million over the next two years to ensure the ability of the Canadian Coast Guard to provide necessary marine safety services. This money has been earmarked for major repairs for the Coast Guard fleet, shore-based infrastructure and for capital replacement purchases for that infrastructure. While this additional funding is both necessary and welcome, it does not directly address shortfalls in the other areas identified by this audit.

For its part, the Department does not always have a strong grasp on how much it actually costs to deliver some of its services. For example, the Department does not track or monitor the costs of maintaining and operating staffed light stations “and therefore does not know whether it has been given appropriate funding.” There is also “limited regular reporting of either financial or non-financial information relating to expected levels of service” within the Department. Departmental managers looking for less costly means of delivering services find that “it is not always possible to obtain cost or activity information in sufficient detail” to compare the current cost of providing a service with alternatives. As Mr. Bouchard told the Committee, the Department doesn’t have “all the numbers or data that [it] would like.”

In addition, the Department’s estimates of revenue from its Marine Services Fee (charged to commercial shippers) have proven overly optimistic. Since funding was reduced on the basis of these forecasts, the Coast Guard “has absorbed $25.4 million in funding shortfalls within ongoing program activities” between 1996-97 and 2001-02.

The Department needs accurate information on the costs of delivering its services in order to manage them properly, and to determine its funding requirements. The Committee accordingly recommends:

RECOMMENDATION 7

That the Department of Fisheries and Oceans develop and implement the means to track and record the costs of delivering all of its services related to marine navigation and boating safety, that this information be linked to non-financial performance information and be made easily available to departmental managers, and that it be used in the preparation of the Department’s Estimates documents and requests for appropriations.

CONCLUSION

The Department of Fisheries and Oceans is fully aware of the problems revealed by the Auditor General of Canada and has agreed to implement all of her recommendations aimed at solving them. This will represent a considerable challenge to the Department, which is operating in a complex and rapidly evolving environment. The Committee welcomes the determination and commitment of the Department to make its marine navigation and boating services both more cost effective and efficient. The Committee notes that the Auditor General intends to follow the Department’s efforts closely and looks forward to audit results that will demonstrate real progress in this area that is so vital to Canadians and their economy.

Pursuant to Standing Order 109, the Committee requests that the Government table a comprehensive response to this report.

A copy of the relevant Minutes of Proceedings (Meeting No. 15, 17, 26 and 29) is tabled.

Respectfully submitted,




JOHN WILLIAMS, M.P.
Chair