:
I now declare this 25th meeting of the Standing Committee on Public Accounts in order.
Colleagues, we have the bells ringing and we've agreed that I'm going to mention a couple of small pieces of business. Then we'll move immediately to the presentation by the Auditor General, Mr. Ferguson. I'll then suspend the meeting and we'll go to the House. When we've concluded voting we will return here and begin our questioning in the usual rotation.
Is everybody in agreement?
Some hon. members: Agreed.
Mr. Chair: All right.
Colleagues, you'll recall that we were rescheduling chapter 8, and the choice next week was Monday or Wednesday. It ends up that Wednesday is the best day for all the parties. So on Wednesday we will be holding a public hearing on chapter 8, “Disaster Relief for Producers—Agriculture and Agri-Food Canada” of the Fall 2013 AG report.
Also, on Monday, May 12, we will do committee business. We have a number of things outstanding.
The last thing I'll mention is the invitation to the annual national conference of public accounts committees to held in St. John's, Newfoundland this year. The invitation is being sent around to you, and I've asked Joann to take a look at a draft budget and any other prep material and have it ready for our Monday business meeting, so we can make some decisions on what we want to do on that.
So if we're good to go, Mr. Ferguson, I'll ask you to read your presentation on your report. Then, as I say, we will suspend, return, and continue after that.
Sir, you now have the floor.
[Translation]
Mr. Chair, I am pleased to present my spring 2014 report, which was tabled in the House of Commons yesterday.
I am accompanied by assistant auditors general Jerome Berthelette and Wendy Loschiuk, and audit principal John Affleck.
This report touches on a number of different areas which illustrate how important it is for government to consider both the long- and short-term perspectives when planning programs. Serving immediate needs can move the emphasis away from long-term planning, which can impact results down the road.
In the first audit, we looked at how the Treasury Board of Canada Secretariat, the RCMP, National Defence and Finance Canada have carried out key responsibilities to manage the federal government's pension plans for public servants.
The federal government's net liability relating to these pension plans exceeds $150 billion. Although we found that the entities we audited have carried out their responsibilities under the law, no one is responsible for carrying out a regular and systematic assessment of whether Government of Canada pension plans are sustainable over the long term.
[English]
Pension plans are operating now in an environment where interest rates are low and plan members are living longer. It is therefore important that public sector pension plans be designed and managed in a way that considers not just present circumstances, but also protects the interests of current and future employees and taxpayers.
We also looked at how Correctional Service Canada planned and executed the expansion of its correctional facilities to accommodate offenders. The agency is adding over 2,700 cells to 37 facilities. It expects that when it completes this work, in 2015, overcrowding in federal prisons will largely be eased.
We found that Correctional Service met its immediate needs, but it did not consider the impact of expansions on supporting infrastructure. It also did not consider how to address regional pressures and the long-term needs of the offender population. Decisions about expansions were based on where land was available and where construction could be completed quickly. For example, we found that eight of twenty institutions that were initially identified for closure were instead expanded. The agency has committed to developing a long-term accommodation plan, by 2015, to guide modernization.
Let's turn our attention to the first nations policing program. This program was created in 1991 to address concerns about policing in first nations communities. The program is not working as intended, and many issues persist. For example, though intended to provide first nations communities with policing services, other than those that are the responsibility of the provinces, we found that the program is sometimes used to replace core services normally provided by the provinces. We also noted that in Ontario the program does not ensure that policing services on first nations reserves meet the standards that apply to policing services elsewhere in the province.
This report also presents our findings about the procurement process used to award the 2009 contract for the government's integrated relocation program. We found that a lack of upfront planning within Public Works and Government Services Canada, National Defence, the RCMP, and the Treasury Board of Canada Secretariat led to missed milestones. This affected decisions the organizations had to make and actions they took along the way. While officials took steps to remove some barriers to competition, these steps were not sufficient. As a result, the relocation services contract process did not facilitate access and encourage competition, and only one bid was received.
[Translation]
Given the complexity of the relocation program contract and its significance, this type of procurement requires considerable oversight and input from senior officials.
Public Works and Government Services Canada should work with its client organizations to manage the procurement of relocation services so that there is sufficient oversight and accountability.
Let's turn now to our audit of how Public Works and Government Services Canada monitors specific terms and conditions outlined in the contracts with a third party provider of building management services. We found that monitoring steps are adequately designed, but noted weaknesses in the way they are implemented.
For example, public works did not apply its quality monitoring program—a key contract monitoring step—to over 230 leased buildings, representing 8% of the total space managed under contracts. Such weaknesses reduced the department's assurance that the service provider complied with the contracts.
In our audit of aggressive tax planning, we found that the Canada Revenue Agency has an adequate program to detect, correct and deter non-compliance of certain tax schemes. However, the agency has to continue its work to improve the management of information to run the aggressive tax planning program and to measure its success.
[English]
In another audit that looked at how the Canadian Northern Economic Development Agency manages and delivers selected transfer payment programs, we found that the agency is not adequately monitoring the contributions it pays out. It does not collect enough information from recipients to know the extent to which they are complying with the requirements set out in their contribution agreements. As a result, the agency does not know the extent to which programs are achieving their intended objectives, nor whether the funding it provides is making a difference to economic development in the north.
[Translation]
When the agency was established in 2009, the government determined that its headquarters would be located in Iqaluit. However, the agency has not been able to fill some key positions in the north, and critical corporate functions continue to reside in the Ottawa liaison office. The agency is updating its human resources plan to guide future recruitment, but it does not have a plan to relocate corporate functions to Iqaluit.
Moving on to our audit of Statistics Canada, we found that the agency applied its framework to ensure the quality of its data products. As Canada's national statistical agency, Statistics Canada generates key information on the country's socio-economic conditions. The information is used by governments, researchers, academics, businesses and non-governmental organizations.
We found that Statistics Canada needs to better understand and address the needs of users outside the federal government, in particular the need for data on small geographic areas and subpopulations.
In 2013, our office performed special examinations of the Laurentian Pilotage Authority and the Canadian Museum of Civilization Corporation. Neither examination noted any significant deficiencies, though we did recommend some improvements to both organizations' practices. As in past years, our spring report includes the main points of the reports we presented to the boards of these Crown corporations.
[English]
As some of these audits show, government can become caught in a cycle reacting to pressures, whether to mitigate capacity concerns in prisons or meet program timelines. Though government should work to provide Canadians with programs and services in a timely fashion, planning should also look beyond the needs of the day. Better long-term planning is achievable in many of the areas we are reporting on today and would improve results for Canadians and make better use of taxpayer dollars.
Mr. Chair, that concludes my opening statement.
[Translation]
We are happy to answer any questions members may have.
Thank you.
:
Your report states that in 2009 Correctional Service Canada received approval to spend $751 million over five years to expand existing institutions. They also received approval in principle to construct five new penitentiaries at a cost of $960 million.
Also, you note that in 2012 Correctional Service Canada recognized that its offender population had not grown as much as they had expected and they consequently returned $1.48 billion that was earmarked for construction, including funding for operations that had been set aside and for growth in the offender population that didn't occur.
As a matter of fact, in your report, Correctional Service Canada projected a growth from 14,200 in 2009 to 18,450 by March 2013. In fact, in March 2013 the population had increased only to 15,224, which is a dramatic shortage versus what had been projected.
Can you provide any insight as to how the officials underestimated this so much, or did officials provide an explanation to you as to why they underestimated the prison population so much?
In general, we will set an audit objective. For example, in the chapter about aggressive tax planning the audit objective was to look at how the Department of Finance manages requests coming from the Canada Revenue Agency to make changes to legislation to deal with certain tax strategies.
We would have asked the Department of Finance for information about their process. They gave us an explanation of how the process works, but then they didn't give us any information that showed how they actually followed the process in the cases we were dealing with. So we would have explained to them exactly what we wanted and the type of evidence we were looking for. Then they would have gone through, looked at what they had available, and assessed it to determine whether it's cabinet confidence. In this case they determined it was cabinet confidence, which meant that we wouldn't get access to it. I think the other case was probably similar.
There is an agreement that says what type of information we do and do not have access to. Departments go through our requests, when we ask for something that is in specific types of documents, to determine whether it's in cabinet confidence documents. Once that decision is made, we obviously don't have access to the information.
:
Thank you very much, Mr. Chair.
I would like to welcome Mr. Ferguson and his entire team. You do extremely important work by pointing out problems with administration, planning and mismanagement in the various departments and in the government while suggesting solutions that need to be made.
Like many Canadians, the people I represent pay their taxes, and it is important that the money be spent intelligently and not wastefully.
In the nine chapters of your report, you raise major problems with management and administration within this government. There is one chapter that seems quite troubling.
The problem comes up in chapter 2, which deals with the process for the procurement of relocation services. To jog your memory, these services are used to relocate employees, including members of the Canadian Forces, at a cost that is as reasonable as possible for the government, which spends approximately $300 million a year on this program.
What's troubling is that, in 2006, you presented a report on this problem, and you concluded that the contracts had not been awarded in a fair and equal manner. The Standing Committee on Public Accounts at the time supported your conclusions. The current government accepted your recommendations that contracts be awarded in the context of a fair, equal, competitive and, of course, economical process. The purpose was to save money.
You are back now in 2014 with another report on the same program being managed by the same department. Once again, your conclusions are that the measures taken to encourage competitiveness in awarding contracts were insufficient. In other words, there is still only one supplier. In eight years, this major problem has not yet been fixed.
For the benefit of taxpayers who pay their taxes, how do you explain that despite all of your past recommendations, the governments—be they Liberal or Conservative—have dropped the ball and that there is still no competitiveness in this area?
This time, we would like to have something with a little more punch to know how the government will finally fix the problem, because eight years to fix a problem is a long time.
:
We have made recommendations in this report.
I think one of the reasons we certainly wanted to get this audit completed was so, if we did identify any weaknesses that existed in the process, that could help to inform the process for the next contract in this area.
Certainly, if we compare the process that was used in 2004 to the process used for the 2009 contract, we see the processes were different, and I would say that the process to award the 2009 contract was better than the process for the 2004 contract.
We did find that the departments got behind schedule, and getting behind schedule meant it had to shorten some timeframes. It took some decisions—for example, issuing only one contract and not dividing it up into three contracts—and all of those decisions led to there being only one bidder that bidder being the incumbent service provider at that time.
I think the other thing that was concerning for us was that—even after it became evident that there would only be one bidder, and Public Works decided to apply its processes to examine the cost, to examine the price that was bid, and got some information that indicated there might be some cost components that shouldn't be allowed—they stopped that work and didn't adjust the pricing in the contract.
We saw the decision points along the way; we understood that they made those decisions, made them within the framework. Those decisions then led to there being only one bidder. But I think the concern for us was that, even after it led to one bidder, they didn't apply the processes they had available to them to examine the price that was bid in a one-bidder situation.
:
Thank you very much, Mr. Chair.
Welcome to Mr. Ferguson, as well as Mr. Berthelette, Mr. Affleck and Ms. Loschiuk.
Mr. Ferguson, I, too, would like to congratulate you on your French. You speak it very well. In fact, you speak it better than I do. So I will speak in English.
[English]
I didn't quite say that, but it's good enough. Clearly, my French is not so good.
I'm going to ask you about chapter 8 and to begin with the observations and recommendations starting at paragraph 8.10. I'm going to ask you some questions about the quality assurance framework and quality guidelines.
First of all, I understand that those do include good measures that ensure the accuracy of the data that Statistics Canada collects. Is that correct?
Actually, I'm going to pick up exactly where my colleague left off, on chapter 8, paragraph 8.52. You did highlight that, due to changes in census collection from mandatory to voluntary, the response rate had decreased from 94% to 69%, which would be a drop of about 25%.
You also pointed out that it had caused data to be more unreliable and, as a result of quality issues with the data collected, that 25% of geographic areas do not have reliable national household survey data available for use.
So in my opinion, when I read this report, it clearly states to me that there were flaws in moving from a mandatory data collection for vital information to a voluntary system. I'd like to ask why you would not have recommended that we go back to a mandatory data collection system, because to me it seems that would be the simple answer to fixing a lot of these problems that were outlined in your report.
Going back to chapter 8, specifically to 8.50, where you talk about data on job vacancies from surveys that you term as having limitations.
In the paragraph itself, you said, “For example, reported job vacancies in Alberta...”. I know my colleagues who live in Alberta always tell us about the great number of jobs that are out there and no doubt that is true. My son actually works there. So there's no question that there are jobs in Alberta.
The dilemma for folks in Welland, for instance, who might be thinking of going there.... According to what I read here, it says that if you look at this particular survey, you wouldn't know where the job vacancy was in Alberta. It could be in Medicine Hat, Fort McMurray, or Grande Prairie.
I used to live in Edmonton, which is at one end of the province compared to the other end of the province, with one in the middle.
You also go on to the end and talk about limited classification types of work and, etc. So really at the end of the day you could pick the right place, such as Grande Prairie, by accident because you thought, “Well, it doesn't really tell me where to go, but I'll go to Grande Prairie, get to the employer”, and then you find out that, 'Well, sorry, you're an electrician, Mr. Allen, and we wanted a pipe fitter.” So I would have travelled to Alberta for a job that doesn't exist because the survey couldn't help me get there; it simply told me there were jobs available. Am I reading that incorrectly?
I realize I've paraphrased some of this and that it's somewhat specific/non-specific, if you will, but is that really what the survey told me, that there are jobs in Alberta but it just can't tell you where the jobs are and what they actually are? Is that really what the survey tells me?
I have some questions with regard to chapter 6 and the CanNor Agency. When I was reading through the report, I found it very unusual that there were several sections in which you indicated they had not followed the proper.... I don't know if it was the proper protocols, but they certainly didn't have adequate tracking, and they were not looking at some of the paperwork in detail that was coming in. Some of the final reports were late, and supporting documentation was inadequate to match the payments that were going out. There were a number of things.
I'm looking at this and seeing some of these payouts of $600,000 and others of $200,000, and one for a truck for $31,000 for which there was no receipt. All of this to me shows a lot of evidence of an agency or a corporation of the federal government responsible to taxpayers in this country before giving out money and signing off on those kinds of cheques failing to do its job appropriately.
What recommendations are being made to the government for it to conform to better standards, better regulations, and more accountability before allowing these kinds of Canadian taxpayers' dollars to be paid out to charitable and business corporations without proper documentation?
:
Thank you. The time has expired. Sorry. Yes, it goes quick.
Colleagues, we had agreed on an order of the day that either at the end of our normal rotation or 5:30, we would deal with the issue of Monsieur Giguère's motion. There are a couple of minutes left before 5:30. This would seem to me to be an appropriate time to deal with this. I would hope that we don't need a lot of debate, maybe one or two, so that de facto we don't eat up the time debating whether we should eat up the time. However, I am in your hands.
I look to Monsieur Giguère. You wish to place your motion, sir?
Unanimous consent at the beginning would have agreed on a formal motion; a clear majority, 50% plus one, will decide the issue.
So, there's a motion duly before us. Does anyone feel the need to speak?
I see Mr. Woodworth's hand first, and then Mr. Albas.