REPORTS TO THE HOUSE
Monday, February 10, 1997
The Standing Committee on Public Accounts has the honour to present its
FOURTH REPORT
Pursuant to Standing Order 108(3)(d), your Committee considered Chapter 11 of the Report of the Auditor General of May 1996 (Revenue Canada -- Combatting Income Tax Avoidance). Two meetings were held on this subject with representatives of Revenue Canada and the Office of the Auditor General, on June 12 and November 6, 1996.
INTRODUCTION
For several years now, the Public Accounts Committee has taken a special interest in issues involving Revenue Canada. For one thing, the Department underwent a number of major changes with the implementation of the GST and administrative consolidation of the former Departments of Customs and Excise and Taxation. For another, it has had to make an extra effort to retain the public's confidence in the income tax and GST collection system. It has stepped up its efforts to combat the underground economy and it has tried to increase the effectiveness of existing programs.
The Committee recognizes that these changes have put a great deal of pressure on departmental resources. However, it is important that Revenue Canada make sure that these resources are directed in a way that reflects its new priorities. The Department has taken a number of steps to improve existing programs. Over the past few years it has frequently responded positively to observations made by the Auditor General in his audits. In the spring of 1995, the Committee began consideration of Revenue Canada's collection, audit and special investigations programs. During the Committee's meetings with them, departmental representatives said that the Department already had a strategy that it planned to implement the following year. The Committee said in the report it tabled on these issues that it supported the Department in this endeavour but that it intended tofollow developments closely. It is in this perspective that the Public Accounts Committee decided to report on the Tax Avoidance Program.
BACKGROUND
Through its various audit programs, Revenue Canada seeks to enhance compliance with the legislation it must apply. Tax avoidance occurs when an operation that generates a tax advantage is contrary to the object or spirit of the law. It differs from tax evasion in that it does not consist in deliberately concealing income or falsifying expenditures.
The Tax Avoidance Program was designed to discourage abusive tax avoidance practices. Its main activities involve detecting and examining suspected abusive tax avoidance schemes and developing policies and procedures to counter them. In 1995-96, 139 full-time equivalents (FTEs) were working for the Tax Avoidance Program, and this number will rise to 160 over the next few years. Again in 1995-96, this group of auditors generated approximately $365 million in reassessments, and Revenue Canada expects the amount generated to climb to $500 million over the next few years.
These figures speak for themselves. Obviously the Public Accounts Committee has no desire to question the value of the Tax Avoidance Program. However, it must be ensured that the auditors who work for it have tools that function adequately. Tax legislation is the first tool they use in making reassessments. Another essential tool is cooperation with other parties involved in tax avoidance matters: this may entail cooperation with other sectors within the Department (Large Business or Appeals, for example) or with other departments (Finance or Justice, for example). The Committee believes that improvements could be made to the Program that would increase the effectiveness of these tools.
COOPERATION AND COMMUNICATION
Until recently, when a tax avoidance auditor began to investigate a given file it was because a front-line tax auditor had decided to refer that file to him or her. In practice, few cases were referred to the tax avoidance auditors. The figures indicate that tax auditors of large businesses referred only 27 cases to the Tax Avoidance Division in 1994-95, and only one to the Toronto office. Moreover, referral practices are not necessarily uniform among the various district offices, which does not promote fairness. The Committee is not confident that a file would be handled the same way everywhere in Canada. At the meeting of November 6, 1996, the Assistant Deputy Minister, Mr. Barry Lacombe, said that he had not been very happy with the handling of the one Toronto tax avoidance referral. He considers, however, that the problem is unlikely to arise again given the new approach to large business audits: tax avoidance auditors will be an integral part of the large business audit team. The Committee regards this as a step in the right direction, facilitating cooperation between the large business tax auditors and the tax avoidance auditors. However, the Committee considers that it remains to be seen whether the new approach will be successful. The Committee has not been given many details on the way in which the expertise of the tax avoidance specialists will be used. It would also like to know how the new approach will encourage standardized case handling by different district offices. Accordingly your Committee recommends:
That, as soon as data are available for the 1996-97 fiscal year, the Department produce a report on the new approach incorporating tax avoidance auditors into large business tax audit teams. The report should compare the number of referrals made by each district office in 1996-97 with the number made in preceding years. The report should also show how the new approach has succeeded in encouraging standardized application of the rules governing large business tax audits.
The Committee also noted that the tax avoidance specialists were not getting enough feedback about changes by other sections to reassessments they had made. For example, assessments can be the subject of a notice of objection, and notices of objection are handled by the Department's Appeals Branch. According to the Auditor General, when assessments are changed the results of the procedure are not always communicated to the people who had worked on the file previously. The Committee considers that it would be helpful for tax avoidance auditors to be informed of the reasons for a change, so that they can be better prepared to identify situations that may lead to an appeal.
The Committee also found that there was a lack of communication regarding rulings handed down by the interdepartmental committee that reviews and approves every application of the General Anti-Avoidance Rule. Like the Appeals Branch, the interdepartmental committee does not systematically give the specialists the feedback they need on its rulings. During the meeting, Mr. Lacombe attempted to reassure the Public Accounts Committee about the problem of communication, noting a number of initiatives that had been implemented. For instance, Revenue Canada now issues a quarterly report to its tax avoidance auditors on all Interdepartmental Committee activities. Measures have been taken to ensure that anything that happens at the Appeals level is fed back to the auditors as well. Mr. Lacombe also said that Revenue Canada had set up a task force on communications. The Department is now working to implement the recommendations made by the task force. It should be noted that the Deputy Auditor General, Mr. Minto, said he was very encouraged by the Department's efforts. The Committee shares his positive reaction, but it still wishes to follow closely the Department's efforts in the area of communication. Accordingly your Committee recommends:
That, as soon as the data become available for the 1996-97 fiscal year, the Department produce a report on the initiatives it announced with respect to communication among its various sections. The report should indicate the extent to which the recommendations of the task force on communications have been implemented.
LEGISLATIVE CHANGES
A. Abusive Tax Shelters
The legislation permits a taxpayer to deduct the losses arising from a tax shelter up to the amount invested or at risk. An abusive tax shelter is one that is set up so that taxpayers can deduct losses that exceed the amount at risk, or overvalue the underlying asset. The Committee found that, until very recently, abusive tax shelters have been the rule rather than the exception: of some 325 tax shelters audited between 1993 and 1995, Revenue Canada found that most were abusive.
Revenue Canada has taken steps to uncover such abuses and deal with them. For example, new rules have been adopted governing at-risk amounts, so that taxpayers cannot deduct losses worth more than the amounts they have put at risk by their investments. The Department has also introduced a new system of film tax credits. The Committee applauds these initiatives, but wonders whether the Department could not go further. During the meeting of November 6, 1996, the Committee asked the departmental representatives what Revenue Canada's reaction would be to the Auditor General's idea of imposing penalties on promoters of abusive tax shelters. In his report, the Auditor General commented that promoters of abusive tax shelters run almost no risks in Canada, whereas in the United States they can be charged and statutory penalties imposed.
The Committee was glad to learn that Mr. Lacombe supports the Auditor General's recommendation, which he regards as a necessary measure. Mr. Lacombe said that Revenue Canada was at that time discussing the possibility with the Department of Finance. However, he could not give a precise date when the discussions would conclude. The Committee considers that this matter should be a priority for the Department, and that it should act in consequence. Accordingly your Committee recommends:
That Revenue Canada and the Department of Finance take prompt steps to introduce penalties for promoters of abusive tax shelters.
B. Hardship Waivers
Another point raised by the Committee was that of hardship waivers in cases of abusive tax shelters. Revenue Canada can reduce the at-source deductions of taxpayers who have invested in tax shelters if they can prove that the deductions exceed the income tax payable at year-end. People buying into tax shelters are encouraged by the promoters to request a hardship waiver because it then becomes possible to finance the cash portion of the purchase out of the reduction in at-source deductions.
A request for a hardship waiver will be rejected only if the shelter is being audited at the time. Given that the Department's records show that most tax shelters have been found to be abusive, the Committee wonders whether the procedure for granting hardship waivers should not be rethought. The Committee understands the idea behind the waivers, but it considers that the limits on granting them are imprecise, especially where tax shelters are involved. Mr. Lacombe said that the Department was going to look into at-source deductions and propose changes if these were to prove necessary. The Committee considers that the Department could go further. Accordingly your Committee recommends:
That Revenue Canada initiate without delay an examination of the issue of at-source deductions, so that the Department will be in a position to inform the Committee, in its overall response to this Report, of any changes it proposes to make.
INTEREST WAIVERS
Since 1991, Revenue Canada has had discretionary power to waive or cancel all or part of interest and penalties assessed for the 1985 and subsequent tax years. During its consideration of the chapter on income tax debt collection in February 1995, the Committee was concerned about the fact that the Department could not determine the total value of reassessments made since 1991 under the Fairness Package. The amount of interest waived under the Fairness Package was nowhere apparent. In its response to the Committee's Eighth Report (1st Session), the Department said it would be presenting a report giving the cumulative total of interest and penalties forgiven under the Fairness Package, as well as a breakdown by reason for the waiver. The official publication of these data in the Public Accounts of Canada is scheduled to begin in 1996-97.
The Committee wants to make sure that the Department includes all relevant data in its report. The Committee learned that the new on-line system to identify cumulative interest can only indicate the amount of interest that has been cancelled by the Appeals Branch, and not the amount waived when a file is subject to audit. The Committee considers it important to know the real amount the Department is foregoing. Mr. Lacombe told the Committee that changes would be made to the system so that it can also produce figures for waived interest that does not appear in the accounting record. He thought the system for handling interest that has been waived should be in place in a year's time. He also said that cancelled and waived interest would be included in the Department's performance report to Parliament. Accordingly your Committee recommends:
That Revenue Canada step up its efforts to make the necessary changes to its systems, so that both cancelled interest and interest not appearing in the accounting record can be included in the Department's next performance report, in the autumn of 1997.
THE UNDERGROUND ECONOMY
Although the issue of the underground economy was not specifically dealt with by the Auditor General in this chapter, the Committee would like to comment on it. First, the Committee considers that intense vigilance is required in dealing with the underground economy, because the battle is far from won. If underground transactions are not firmly opposed, they may undermine voluntary compliance. The Committee considers that the Department should continue its efforts to publicize fraud convictions widely. The Department should also try to improve its detection techniques still further, since taxpayers are finding more and more subtle ways of getting around the law. Second, the Committee shares the widely-held sentiment that the more complicated a tax is, the less willing people are to pay it. That is why the Committee urges Revenue Canada look actively for ways to simplify the administration of the tax legislation.
The Committee observed that the Department has made the fight against the underground economy one of its priorities, as evidenced by the fact that the resources assigned to this program will go from 1,200 FTEs to 2,000 FTEs by 1998-99. The Department estimates that this initiative will bring in net revenues of about $100 million a year. The Committee does not question the decision to assign additional resources to the program, but it would like the initiative to be reviewed from time to time to ensure that these resources would not be more valuable elsewhere. The Committee is eager to see the conclusions arising out of the evaluation of the underground economy program that the Department is carrying out in 1996-97.
Pursuant to Standing Order 109, your Committee requests the government to table a comprehensive response to this Report.
A copy of the relevant Minutes of Proceedings (Issues nos.1, 2 and 3 which includes this Report) is tabled.
Respectfully submitted,
MICHEL GUIMOND
Chair
Monday, April 7, 1997
The Standing Committee on Public Accounts has the honour to present its
FIFTH REPORT
Pursuant to Standing Order 108(3)(d), your Committee considered Chapter 14 of the Report of the Auditor General of September 1996 (Service Quality). One meeting was held on this subject with representatives of Treasury Board Secretariat, Human Resources Development Canada, and the Office of the Auditor General, on 5 November 1996.
INTRODUCTION
Canadians pay for and receive a wide variety of services from their federal government. These services include issuing passports, answering tax inquiries, and processing claims for employment insurance. The audit reported in chapter 14 of the Auditor General's September 1996 Report examined 13 important services that are delivered directly to the public.
It is of great importance that services delivered by government be of the highest possible quality. These services often correspond to very fundamental needs, especially when they concern social security. In addition, for many, the process of receiving a service is the principal form of contact between them and their federal government. It is through this experience that they form their views of government as an institution. The quality of the service they receive is, therefore, an important determining factor in shaping opinions about government as a whole. In this respect, concern about the quality of this service goes beyond issues of great importance to individuals and touches upon confidence in our governing institutions. For all of these reasons, the quality of the services being delivered is an issue that should rank among the leading priorities of public servants and elected representatives alike.
In order to explore the quality of services delivered directly to Canadians by the federal government, the Committee met with Assistant Auditor General Maria Barrados, Secretary of Treasury Board Secretariat Peter Harder, and Mr. Hy Braiter and Mr. David Good of the Department of Human Resources Development on 5 November 1996.
SERVICE STANDARDS
One of the most effective ways to improve the quality of services is through implementation of service standards for such factors as timeliness, accessibility, reliability and accuracy of service. These standards - if developed in consultation with clients and public service providers - promise not only to improve services, but to enhance accountability and transparency. The performance of those providing services can be assessed against these standards and recipients will know what they can reasonably expect. Furthermore, the process of developing standards in consultation with recipients should help government assign priorities to the services it provides. This in turn should facilitate elimination of services for which there is little need or demand. Services that are retained can then be better targeted to address actual needs. From this perspective, developing and implementing service standards should be viewed as an integral part of the strategy to control costs and get government right."
The need for service standards is recognized within government. Unfortunately this need has not yet been fully realized.
Beginning in December 1990, government has made repeated commitments to establishing clear standards for the services it delivers. Often, these commitments have included setting target dates for full implementation of these standards. One of the more recent expressions of this commitment is found in Part I of the Estimates for 1995-96 and states that "departments will have service standards in place for their major services by the end of 1996."
The Committee discovered that these expectations have not been met. In his Report the Auditor General indicates that, as of 31 March 1996, "none of the 13 services [audited] had published service standards that contained all of the required elements." (14.29) Based on this, as well as other observations, the Auditor General concludes that "government expectations have not been realized" with regard to the implementation of service standards. Between completion of the audit, the release of its findings in September, and the Committee's meeting with witnesses on 5 November 1996, little had changed. As Maria Barrados, Assistant Auditor General, told us in her opening statement, "[o]verall, the government's progress in implementing service standards has been slow and its achievement uneven. Implementation target dates have not been met." (30:2)
During our discussion with witnesses, we endeavoured to find out why these expectations and commitments have not been met. Mr. Harder, Secretary of the Treasury Board and Comptroller General of Canada, told us that quality service "is a complex process" that "often takes five to seven years to accomplish."(30:4) The responsibility for implementing service standards and the quality services initiative, he emphasized, "lies with departments."(30:3) At another point in his testimony, he suggested that Parliament assume some of the responsibility, indicating that members of the Committee and "your colleagues in other committees would be very helpful ... if you asked where these various departments are on service standards, where their quality service plans are." (30:16) For his part, Mr. Braiter, of Human Resources Development Canada, agreed that it takes a long time to implement service standards, and stated that the biggest constraint involved was an attitudinal one - "making sure everybody really believes that the reason they are civil servants and public servants is to serve the public." (30:20) Mr. Braiter also stated that leadership was something "which we have lots of." (30:20). Yet, despite the claim of plentiful leadership and the passage of seven years - the outer limit identified by Mr. Harder as the amount of time needed to complete such exercises - the Auditor General reports that the results are incomplete and disappointing.
When the federal government first embarked on the Service Standards Initiative in 1990 (now part of the Quality Services Initiative), the President of Treasury Board was given the overall responsibility for the initiative. At least initially, the Secretary of Treasury Board "took a lead role in developing guidance, requesting progress reports and co-ordinating interdepartmental networks and committees" engaged in the service standards initiative. (14:22) Apparently, all of this has changed. Now, it is the departments' responsibility alone - with prodding from parliamentary committees - to ensure that standards will be developed for the services they provide.
Mr. Harder was asked to follow the example set by his predecessors and indicate when he expected all departments to have service standards in place. The Committee sought an answer to this question for two fundamental reasons. A commitment to a completion date constitutes an essential element in the accountability framework needed to ensure successful implementation of this initiative. Setting this date would send a clear message to the departments emphasizing the priority which the government assigns to this issue and the expectations flowing from that priority. Furthermore, by identifying a date, the Secretary of Treasury Board would confirm his department's leadership role in providing an implementation and accountability framework. Lastly, had he given a positive answer to the Committee's question, Mr. Harder would have given a commitment against which he and Treasury Board Secretariat could also have been held accountable.
Yet given this opportunity, Mr. Harder chose to tell the Committee:
I don't want to give a date so you or your successor can say, "You were here last week or last month and said the Government of Canada would be able to do it by x date," when in fact it has to be done by the departments that are delivering service changes. I don't think it would be helpful to have an artificial date. (30:33)
Mr. Harder gave this answer in spite of his recognition that previous efforts to set implantation targets were "an attempt by the people who were leading this to provide an incentive and a level of encouragement to departments and signal the seriousness with which quality service is being focused on." (30:33) Apparently, this is an incentive he will not give, a signal that he will not send. In his opinion, the previous dates that were established, were "artificial." Mr. Harder's refusal to name a completion date was all the more surprising in light of his assertion that "many federal departments have introduced service standards" and are "now beginning to publish these standards."(30:3) If one accepts the accuracy of this statement, how difficult should it be to identify the point at which the exercise will be finished and standards in place for all departments?
Mr. Harder's comments appear to suggest that neither he nor Treasury Board Secretariat want to dictate to departments what they must do. But leadership also consists of other measures. It also consists of making clear statements of expectations and setting an example by accepting a measure of responsibility for outcomes that are achieved. What are departments to make of it when the Secretary of Treasury Board declines to do either one of these things? Clearly, if this initiative is not to be sidelined, as the Auditor General fears it might, Treasury Board Secretariat must accept its responsibility and move the process forward. To accomplish this, Treasury Board Secretariat must provide an implementation framework, must co-ordinate this effort throughout government and must offer departments the guidance and incentives for ensuring that they succeed. The Committee therefore recommends:
That Treasury Board Secretariat develop and make public its implementation framework for the Quality Services Initiative by 30 September 1997. Particular reference must be made to achieving service standards within the context of the Initiative.
Furthermore, we recommend:
That Treasury Board Secretariat lead the Quality Services Initiative by establishing, in co-operation with the departments, a final target completion date for the entire initiative, and by providing guidance and incentives to the departments to ensure that this initiative is completed successfully.
We also recommend:
That by 30 September 1997 Treasury Board Secretariat make public the target implementation date for the Quality Services Initiative.
Measuring performance against expectations is a key element in an accountability relationship. If departments are going to set standards for the services they provide, they must develop implementation plans that include target completion dates; otherwise, the process threatens to drag out forever. Once these plans and targets have been established, departments can be held accountable for achieving them.
It is important not to underestimate the difficulties involved in developing service standards and setting dates for implementing them. But although the exercise is difficult, it is not impossible. The Committee was pleased to note that Human Resources Development Canada - a department that is more heavily involved than most in delivering services to Canadians - showed no reluctance in naming the date by which it expected to have its service standards developed and published. Mr. Good told us that it is his department's "commitment and intent" to have the standards published by 1997-98, following consultation with its clients. If this department can take this step, others should be capable of doing the same. We therefore strongly recommend:
That all departments delivering services directly to Canadians establish plans for implementing the Quality Services Initiative. These plans must include a timetable for full implementation, including target dates for publication of service standards, and must be made available to Parliament and the public.
In his report, the Auditor General stressed that in order to be effective, service standards should be developed in consultation with those receiving the services. While it would be unrealistic to expect that all client preferences will be met, they must be taken into account if a balance is to be achieved between what is needed and what can be provided. The Committee was thus troubled to learn that in those instances in which standards had been developed, little consultation with clients had taken place. This is of particular concern when departments adopt technological approaches to service delivery in order to save money. For example, reliance on touch-tone phone services may create substantial barriers for senior citizens, or for those who prefer to deal with human beings rather than machines. In addition, efforts to reduce costs by consolidating services in single locations may move these services beyond the reach of those who truly need them. These are drawbacks that might be avoided if careful consultations with clients had been conducted before hand. We therefore recommend:
That departments, as an integral part of establishing standards for the services they provide, consult those receiving services and take their needs into account before final implementation occurs.
Mr. Harder indicated that standing committees of the House of Commons have a role to play in ensuring that the quality services initiative succeeds. If Standing Committees are to do this, they must have appropriate information on departmental service standards. Recently, under the guidance of Treasury Board Secretariat, several departments and agencies have begun to produce pilot performance documents that have been tabled in the fall and referred to the appropriate standing committees. Apart from these pilot documents, departments regularly include statements regarding past performance in part III of their Estimates. In order to give departmental progress in setting and meeting service standards the profile it deserves, this information should be made available to Parliament through either one of these vehicles. Accordingly, we recommend:
That departments make public the standards they have established for the services they deliver to Canadians and report performance against these standards in either Part III of their Estimates, or, when appropriate, in performance reports tabled in the House of Commons in the fall.
In closing, we note Ms. Barrados' observation in her opening statement that "little information has been provided by Treasury Board Secretariat to Parliament to indicate clearly the progress in the implementation of service standards." (30:3) In order to rectify this shortcoming, we recommend:
That Treasury Board Secretariat report annually to Parliament on the progress being made in the development and implementation of service standards throughout government, either in Part III of its Estimates, in its performance report, or in a separate document designated for this purpose.
TELEPHONE SERVICES
Because the telephone has become the most common method used by Canadians to communicate with government, the Auditor General focused particular attention on the telephone operations of six of the 13 services that were examined. The results reported are not encouraging.
Despite variations, callers generally had difficulty in getting through to call centres. Callers often encounter busy signals or are put on hold; many abandon their attempt and hang up. When calls are answered, the accuracy of the information provided is sometimes in doubt. Most of the audited departments did not assess the quality of information being provided by their phone services. The one instance in which verification did take place, the results were particularly discouraging. The Committee was particularly dismayed to discover that according to the Auditor General, Revenue Canada's Taxation branch's rate of accuracy of answers "has varied between 61 and 79 percent in the last few years." (14.57) Since calls often involve efforts to obtain information about vital government services, long waits and inaccurate answers are simply not acceptable.
In response to these problems, actions taken by the departments involved seems scarcely adequate. Although some have established internal accessibility targets, none have published service standards that would give clients an idea of how long they can reasonably be expected to wait for calls to be answered. The quality of telephone contacts is not regularly monitored and, with the exception of Taxation and Statistics Canada, none of the services had set targets for the accuracy of answers to their clients. Finally, little effort has been made to collect and analyse the nature of clients' calls and complaints.
In order to correct these deficiencies, the Committee recommends:
That departments with telephone services publish service standards governing accessibility and accuracy of answers, that they collect and analyse client complaints about telephone services, and that they regularly measure and publicly report performance against the standards they have established.
DIRECT DEPOSIT
During our meeting with witnesses we discovered that many of the inquiries received by departmental telephone services concerned the status of cheques sent out to clients. One way of reducing these enquiries - and thus the burden placed on phone centres - would be to have more of these cheques deposited directly into recipients' bank accounts. Other benefits include reduced costs to government (in terms of postage, envelopes, handling, etc.) and enhanced security for senior recipients.
Considerable progress has already been achieved in enhancing the use of direct deposits. Public Works and Government Services Canada is leading a government-wide initiative to promote the use of direct deposit and the number of such deposits has grown from 5 million in 1991 to 74 million in 1995-96. The Committee learned that Old Age Security, the Canada Pension Plan and the Child Tax Benefit now have direct deposit enrolment rates of 63.8 percent, 60 percent and 48.2 percent respectively as of 31 March 1996.
The Committee recognizes that efforts to increase the numbers of direct deposits may encounter certain limitations. For example, our witnesses pointed out that some recipients are either transient, do not have permanent bank accounts, or both. However, while we acknowledge that the level of direct deposit can not be brought to 100 percent, we do think that departments must continue efforts to expand this practice to the fullest extent possible. The Committee therefore recommends:
That departments engaged in paying benefits continue with efforts to enhance the use of direct deposits as the principal means of payment.
CONCLUSION
As Members of the House of Commons Standing Committee on Public Accounts, we are concerned that government achieves maximum value in exchange for the moneys it receives through taxes and other fees paid by Canadians. We are also concerned that those who are entrusted with public funds be held accountable for their prudent use and in accordance with policies adopted by Parliament.
As individual Members of the House of Commons, we are also deeply concerned with the well-being of our constituents. For us, the notion of providing good service to Canadians extends well beyond a simple theoretical issue. Instead, this is a matter that is of fundamental importance in the day-to-day lives of many of those whom we represent.
The results reported by the Auditor General in this chapter of the September 1996 report therefore deeply concern us at both levels. It is evident that since improvements to service delivery are not being pursued with sufficient rigour, opportunities to reduce costs while tailoring programs to meet actual needs are being lost. It is also evident - and we know this through daily contact with those whom we serve - that the needs of individual citizens are not being fully met. Neither situation is tolerable.
We therefore call upon government to act promptly on both our recommendations and those made by the Auditor General of Canada. Through sustained effort and sufficient will, government should be able to provide Canadians with services that are of the highest quality possible in accordance with standards that are reasonable and public. In light of the taxes they pay and the need that exists, Canadians should not be required to wait any longer.
Pursuant to Standing Order 109, your Committee requests the government to table a comprehensive response to this Report.
The supplementary opinion of Denis Paradis is appended to this Report.
A copy of the relevant Minutes of Proceedings (Issues nos. 2 and 3 which includes this Report) is tabled.
Respectfully submitted,
MICHEL GUIMOND
Chair
Denis Paradis
MP Brome-Missisquoi
Vice-Chairman of the Standing Committee on Public Accounts
Supplementary Opinion to the Report of
the Standing Committee on Public Accounts
Wednesday, March 19th, 1997
Direct Deposit
For salary purposes
Direct deposit is an appropriate payment method for those who receive salariesfrom the federal government. The system is practical and economical for thestable, regular salaries paid by the government to its employees.
Prevention of fraud
However, for payments made under specific government programs, such as employment insurance and family allowances, the use of direct deposit is likely to require a degree of saintliness among recipients that is beyond the reach of the average citizen. If the money is deposited automatically and regularly in a recipient's bank account, the recipient may well not feel a sense of urgencyabout informing the payor that the conditions of his or her status or availability have changed, whether temporarily or permanently.
Conversely, payment by means of a cheque forces the recipient to take definite action (to endorse or deposit the cheque), and this may prevent cases of abuse or fraud.
For example, although our employment insurance system requires recipients to be available for work in Canada, it is relatively easy to go to Florida with the direct deposit system, while endorsing and depositing a cheque is likely torequire a local presence.
The visibility of government
At a time when we are trying to develop a feeling of Canadian pride, one issuemust be raised concerning the significance of government visibility when apayment is made to a recipient. Those receiving employment insurance benefits or a family allowance should receive a real cheque from the government rather than using the direct deposit system.
In conclusion, direct deposit has the effect of distancing citizens from theirgovernment.
Respectfully submitted,
Denis Paradis, MP
Brome-Missisquoi
Monday, April 14, 1997
The Standing Committee on Public Accounts has the honour to present its
SIXTH REPORT
Pursuant to Standing Order 108(3)(d), your Committee has studied Chapter 26 of the November 1996 Report of the Auditor General (Canada Infrastructure Works Program - Lessons Learned). The Committee held a meeting on this subject on February 20, 1997 with representatives of the Office of the Auditor General, the Canada Infrastructure Works Office, the Treasury Board Secretariat and the Federal Office of Regional Development (Quebec).
Introduction
The Canada Infrastructure Works Program was introduced by the federal government in 1994 as a temporary initiative, with a planned duration of five years. A series of federal-provincial agreements provides the framework for its implementation and assigns much of the authority for the day-to-day delivery to the provinces.
The cost of the program is shared. The federal government contributed approximately $2 billion in program funds, with roughly a further $4 billion provided by provincial governments and municipalities, along with other local sponsors. Federal funds were allocated to provinces, territories and First Nations based on their respective shares of population and unemployment, both of which were given equal weight.
The Auditor General's observations about the Canada Infrastructure Works Program are presented as lessons learned. The Committee is of the view that his observations come just at the right time, given the government's recent decision to extend the program. $425 million will be added to the $175 million expenditure that was planned for under the initial program. Along with the program evaluation conducted by Mr. Richard Soberman at the University of Toronto, published in September 1996, the Committee feels that the government now has two high-quality documents prepared by outside sources that will enable it to identify the program's strengths and weaknesses. At the meeting, the Committee's goal was in fact to find out what lessons the government had learned from the first phase of the program, and whether the government was planning to make changes in the second phase or in future programs of the same kind.
The Committee would also like to point out that the program has proven beneficial from a number of standpoints. First, the program was implemented rapidly, which was essential if its goal - that of accelerating national economic recovery by creating jobs - was to be achieved. Within a period of only eight weeks following the announcement of the program, the federal-provincial agreements were put in place, program frameworks were developed, guidelines established, and the program made operational. Second, existing expertise and competencies were considered, but all the stakeholders had some input. Program implementation focused on local identification of needs, community priority setting and local municipal decision-making about project selection. The projects selected were examined by the provinces and the federal government. Third, the 12,000 projects approved have contributed substantially to improved local infrastructures in Canada.
Early in the meeting, Mr. Paul Thibault, Executive Director of the Canada Infrastructure Works Program, told the Committee that he noted some discrepancy between the text of Chapter 26 which in total is rather positive about the program, and the Main Points and the Auditor General's press release, which both concentrate almost entirely on the negative. After reviewing these documents, the Committee acknowledges that Mr. Thibault's dissatisfaction with the press release may well be justified.
Compliance audit
The success of the Canada Infrastructure Works Program (CIWP) will likely encourage the government to explore this new method of delivering service. The Committee would like to make a few comments on this point. The federal government was not responsible for day-to-day CIWP project management, which was left to the provinces and municipalities. This arrangement had the effect of avoiding overlap of functions and reducing overall administrative expenditures. The Committee is in agreement with these terms. However, Committee members feel it is important not to lose sight of the fact that Parliament must be certain that public funds are spent on the purpose for which they are intended. It is therefore important to know that program goals have been reached and that the conditions were met.
Since one may assume that the other levels of government also want to be sure of this, the Committee believes that any level of government could actually carry out the compliance audit. The federal government would only have to ensure that the criteria used in conducting the audit are acceptable.
In his report, the Auditor General noted that the agreements contained no specific requirements for timely compliance audits. Quebec has been relatively more effective in this regard, and has introduced a compliance audit system for a sampling of projects. The audits were to be completed before final payments were made, and penalties were provided for.
In its response at the end of Chapter 26, the government agreed with the conclusion that the requirement for a compliance audit plan should have been included in each of the agreements at the outset. The Committee was pleased to learn that the CIWP Office will be negotiating agreements on audit planning for the extended program. Therefore, the Committee recommends:
That the CIWP Office follow Quebec's example when negotiating agreements with its partners in order to put in place a compliance audit system. The Office should also ensure that the quality and coverage of the compliance audits meet the federal government's requirements for the program.
Additional or incremental investment
One program requirement concerned the generation of additional or accelerated investment. In other words, it was expected that the investment in infrastructure would be greater than it would have been if the program had not existed. Government funds were not to be invested in projects that would have been carried out in any case. The Committee noted that incremental investment is not easy to measure. Two factors must be understood: how much actually was spent by municipalities on infrastructure, and how much would have been spent had the program not existed. Because there is no exact way to determine municipalities' prior intentions, the measure of the level of incrementality is at best approximate. As Mr. Thibault said at the meeting, this is not an exact science.
In the Committee's view, it is nevertheless important to determine the extent to which the program has made a difference, even if it is only possible to come up with an estimate. The CIWP evaluation conducted by Mr. Richard Soberman states that this was not a priority objective in the decision-making process: "In terms of Program weaknesses, one relates to the level of incremental spending. Employment and other economic benefits are directly related to incrementality but, except for Quebec, there appears to have been little serious effort to enforce this program requirement. Nation-wide, the level of incrementality cannot be determined with a high degree of certainty." However, the study uses two assumed levels of incrementality for its economic evaluation - 100 per cent and 60 per cent. The author mentions that the level of 60 per cent appears to be more realistic than the level of 100 per cent.
For his part, the Auditor General estimated that, in 1994, 35 per cent of total expenditures replaced capital expenditures that would have been incurred in any case. The Auditor General, then, calculated the level of incrementality at 65 per cent. In its response at the end of the Chapter, the government stated that recent information from Statistics Canada on actual municipal capital investment supports the government's analysis of a level of additional investment that was somewhat higher than the chapter's estimates.
Faced with all these data, the Committee would like to make two observations. First, the Committee notes that the projects that did not generate incremental investment were probably not any less useful or necessary on that account. Clearly, almost all the projects resulted in local infrastructure enhancements and created jobs. However, the Committee is of the view that that the government must attempt to maximize the returns made on investments in this type of program. The Committee does not want to get into a war of numbers on what the program's real level of incremental investment was, what it would have been otherwise, and what it should be now that the program has been extended. However, and this is the Committee's second observation, efforts should be made to demonstrate more clearly that there is incremental investment.
In this regard, the Committee would like to highlight the innovative aspect of the approach used in the Canada-Quebec agreement to ensure incremental investment. The Ministry of Municipal Affairs calculated the minimum capital expenditure level for every municipality in Quebec. Mr. Guy MacKenzie, Assistant Deputy Minister in the Federal Office of Regional Development (Quebec), told the Committee that the minimum capital expenditure level was determined by taking the lowest result from the following three calculations: average capital expenditures for engineering in 1991 and 1992, and the average for municipalities of comparable size.
The Committee would like to mention that in his 1995-1996 report the Auditor General for Quebec mentioned a few points that raise concerns about the calculation of the minimum level. The method used can be improved, but the Committee believes that the basic idea is a good one. In the other provinces, most provisions for additional investment were applied to individual projects rather than to overall investment by municipalities. This situation can be problematic. For example, a new, improved project may hide a project abandoned because it would have been ineligible for CIWP assistance. If projects are simply replaced, overall investment by municipalities is not necessarily increased.
During the meeting, the Committee asked Mr. Thibault whether he planned to monitor the level of incremental investment more closely. Mr. Thibault answered in the affirmative. He went on to say: ". . . we now have an evaluation plan which we will implement for the first part of the program in an effort to deal with these questions in a better fashion and to provide you with more details the next time."
The Committee is aware that calculating incremental investment on the basis of a minimum level will constitute a significant alteration in the agreements. We are therefore not expecting that it will be included in the current negotiations for the extended program. However, the Committee recommends:
That this component be taken into consideration in any similar infrastructure program in the future.
Pursuant to Standing Order 109, the Committee requests the Government to table a comprehensive response to this Report.
A copy of the relevant Minutes of Proceedings (Issue No. 3 which includes this Report) is tabled.
Respectfully submitted,
MICHEL GUIMOND
Chair
Tuesday, April 15, 1997
The Standing Committee on Public Accounts has the honour to present its
SEVENTH REPORT
Pursuant to Standing Order 108(3)(d), your Committee has studied Chapter 23 of the November 1996 Report of the Auditor General (Materiel Management in the Federal Government).
I. INTRODUCTION
In the government of Canada, the term "materiel" refers to all moveable public property and all other assets other than money and real property. Costs associated with these assets are significant. Each year, federal government materiel purchases are quite large - for fiscal year 1994-95, for example, approximately $8 billion was spent for this purpose. In addition, the estimated value of the government's materiel holdings is considerable - approximately $50 billion dollars. Of these holdings, materiel valued at between $8 and $10 billion is kept in warehouses, at an estimated carrying cost of between $2 billion and $2.5 billion annually.
In light of these costs, it is important that management of materiel assets - an activity which encompasses acquisition, use, and disposal - be conducted as effectively and efficiently as possible. In chapter 23 of his Annual Report for 1996, however, the Auditor General of Canada informed Parliament that many of the deficiencies in the government's materiel management practices identified in audits as far back as 1980 still exist. Although he reported that initiatives are under way to correct these deficiencies, he indicated that additional actions are required in order to ensure that they succeed.
As a consequence of the costs involved and the need to ensure that immediate steps are taken to produce more effective management of these assets, the Committee met with the Auditor General of Canada, Mr. Al Clayton, Executive Director, Bureau of Real Property and Materiel, Government Operations Sector, Treasury Board Secretariat, and Ms Louise Fréchette, Deputy Minister, Department of National Defence, on 11 and 12 February 1997.
II. OBSERVATIONS AND RECOMMENDATIONS
From the information contained in the Auditor General's Report and testimony given by witnesses, the Committee learned that materiel management within the federal government constitutes a significant challenge. The audit report found that the departments and agencies examined often do not know how much materiel they hold in inventory, and where it is located. Roles and accountability relationships are unclear, and information systems established to track materiel holdings are quite often inadequate; this makes good materiel management very difficult.
The Policy and Management Framework for Materiel
A sound policy and management framework needs to be in place so that materiel holdings can be managed effectively and with due regard for economy. The Auditor General's findings indicate that although these basic structural elements are in place, they contain gaps which frustrate better management of these costly resources. Improvements are needed with respect to the role of Treasury Board Secretariat - the central agency responsible for monitoring materiel management practices throughout government - and at the departmental level where the principal responsibility for the day-to-day management of materiel resources lies.
The responsibility for providing leadership, direction and advice to departments on materiel management belongs to Treasury Board Secretariat. The Auditor General reports that the Secretariat has taken a number of initiatives to fulfil its role in this respect; an important aspect of this role, however, is not receiving the attention it deserves. According to its own policies on materiel management, Treasury Board Secretariat monitors the implementation and effectiveness of Treasury Board's materiel management policy. The audit reported, however, that the Bureau of Real Property and Materiel, the unit within the Secretariat that deals with materiel policy,
has access to departmental internal audit and program evaluation reports but does not monitor them systematically to identify problems with the materiel management policy or its implementation. (23.27)
According to the Auditor General, Treasury Board Secretariat officials explained that this systematic monitoring of departmental internal audits and program evaluations is not carried out
because the departmental reports do not provide information that [Secretariat officials] consider useful to address systemic issues...(23.27)
This assessment was confirmed by Mr. Clayton, Director of the Bureau of Real Property and Materiel, who told the Committee that departmental information systems "are not all that good."(39:16) In his Report, the Auditor General concluded that Treasury Board Secretariat does not have all the information it needs to fulfil its responsibilities.
To further complicate matters, there appears to be different interpretations of what Treasury Board Secretariat's role is or ought to be with respect to monitoring materiel management throughout government. While these interpretations may have varying degrees of accuracy and validity, they need to be resolved as part of the effort to improve government-wide materiel management. As things currently stand, the uncertainty surrounding Treasury Board Secretariat's role prompted some members of the Committee to wonder whether the Secretariat's involvement in materiel management was really needed. Others felt that perhaps the Secretariat should fulfil its mandate as described in its policies on a more proactive basis.
Two steps are needed to address problems in the policy and management framework for materiel management. Treasury Board Secretariat needs to clarify its role in this area - including its monitoring function - and to better align practice with policy. For their part, departments also need to clarify roles and responsibilities, and to put in place information systems that respond to Treasury Board Secretariat's needs as well as their own. Accordingly, as a first step, we recommend:
That Treasury Board Secretariat review and clarify its role in government-wide materiel management, including the monitoring of departmental materiel management performance, and that it subsequently align its materiel management practices with policies.
Clarification and affirmation of the Secretariat's role should be accomplished in a timely fashion so that departments can align their materiel policies and practices with policies accordingly. We therefore recommend:
That Treasury Board Secretariat complete its review and report the results no later than 30 September 1997.
Once Treasury Board Secretariat has determined what its role should be, departments will have to develop systems capable of providing the kind of information on materiel management that the Secretariat needs to perform this role. These information systems must also be able to give departmental managers the data they need to assess performance and make informed judgements regarding materiel resources. The Auditor General stressed the need for such systems in his Report, observing that he had "found deficiencies in all the organizations' materiel management information systems." (23.36) Often, information could not be transferred from one system to another within departments and the data they contained was incomplete. As a result of these deficiencies, the actual costs of using and holding materiel were not fully known, and sound decisions regarding the procurement, use, and disposal of materiel could not be taken. Another consequence is that government departments may be holding inventories surplus to their needs; indeed the evidence reported by the Auditor General suggests that this is the case. Since departments cannot properly manage what they cannot count, we recommend:
That departments develop integrated information systems capable of providing their managers and Treasury Board Secretariat with data on materiel management practices and performance that is both timely and relevant. This information should include data on materiel inventories and holding costs.
The Committee also noted with some concern that Treasury Board policies that direct departments to make the costs associated with the use of materiel known to end users are not always adhered to. This is a situation that must be corrected promptly in order to encourage the prudent and economical use of resources. We therefore recommend:
That Treasury Board Secretariat and the departments take immediate steps to ensure that the costs associated with the use of materiel be made visible to end users.
The Committee understands that among the departments examined for the audit of materiel management, there are already major efforts underway to revise and simplify policies and to clearly define roles, responsibilities and accountability for materiel management. These steps are welcome and departments should make every effort to ensure they succeed. Establishing timetables and reporting on the status of these initiatives will help enable them to do so. The Committee therefore recommends:
That departments provide status reports and timetables on their initiatives under way to address long-standing materiel management deficiencies in Part III of their annual Estimates, beginning with fiscal year 1998-99.
The Committee considers that better materiel management is vital. We believe, therefore, that Treasury Board Secretariat should also report regularly to Parliament on the overall status of materiel management in the federal government. These reports should focus on the Secretariat's role in this area, discuss improvements that have been made and concrete results produced. We therefore recommend:
That Treasury Board Secretariat report annually to Parliament on the status of materiel management in the federal government. In particular, such reports should include references to the status of accountability relationships, costs associated with holding materiel, details regarding initiatives to reduces these costs, and explicit statements of the amounts saved as a consequence. Such reports should also draw Parliament's attention to those departments that have made real progress and those departments whose progress has fallen short of expectations.
Disposal of Surplus Materiel Assets
When materiel assets cease to be of use to departments, there are mechanisms in place to facilitate their disposal. Disposal of materiel is a means by which departments can reduce surplus inventories and also represents a source of potential income: the Auditor General reports that revenues from the disposal of surplus materiel are in excess of $40 million a year. In addition, a study by Treasury Board Secretariat in 1995 reported that the potential annual cost savings from eliminating unnecessary inventory could reach $1.25 billion. Although inventories may have been reduced since that time, the Auditor General indicates that the potential for significant savings still exists.
It therefore stands to reason that the disposal process should function smoothly and that departments should have all reasonable access to it. The Committee learned, however, that there is some confusion about the way this process should operate.
Under current policy, the Crown Assets Distribution Directorate (a unit of Public Works and Government Services Canada) is required to provide common services for the disposals of assets. In 1992, legislative changes were made to allow departments the option of using these services or taking care of disposals themselves. Following this change, some departmental disposal projects were set up on a pilot basis. Although some encouraging results were obtained, no decision has yet been made on the balance required between departmental initiative and the need for some central control and co-ordination of this activity. The Auditor General told the Committee that this issue is currently under study but that it should be resolved as soon as possible in order to take full advantage of the disposal option. Mr. Clayton assured the Committee that the results of the study should be releasesd within days or months. The Committee looks forward to the conclusions and wishes to encourage their timely presentation. We therefore recommend:
That Treasury Board Secretariat and Public Works and Government Services Canada make the conclusions of their study of disposal mechanisms known by 30 September 1997 at the latest.
The Department of National Defence
Of the departments included in the audit, the Department of National Defence spent the most on materiel acquisition: $4.2 billion during the 1994-95 fiscal year. The value of its materiel inventory was also quite considerable; the Department's own estimates indicated that these holdings had a value of approximately $8.5 billion and a direct annual inventory management cost of $567 million.
Because of the size of its materiel holdings and the scope of its efforts to introduce changes to the way it manages them, the Committee was anxious to hear from the Department on the progress it is making in this area; if such a large and complex organization can solve its problems in materiel management, this should serve as a source of information and encouragement to other departments and agencies.
The Committee learned that the Department has initiated a Cost-Visibility Project to supply its managers with better information on costs. Furthermore, unlike the other audited organizations, DND has a comprehensive, department-wide, asset and inventory management system. This system is not capable, however, of providing adequate aggregate information and is being upgraded. The Department has also identified materiel inventory surplus to its needs and is taking steps to reduce the excess. Ms Fréchette told the Committee that the Department has an overall objective to reduce its stocks of inventory by at least 30% over the next three years.
The Committee was encouraged that the Department is taking steps to correct problems in its management of materiel, it and is anxious that these efforts remain on schedule and produce the expected results. We therefore recommend:
That the Department of National Defence establish a firm timetable for completion of its initiatives to renew its materiel management practices by 30 September 1997, and report its progress in Part III of its Estimates, beginning with fiscal year 1998-99.
The Committee is also concerned about the status of the Department's project to upgrade its supply system. According to the Auditor General, restructuring of materiel management in the Department depends to a great extent on successful completion of this project. He reports, however, that the project is at risk. (Exhibit 23.5) Ms. Fréchette, on the other hand, told the Committee that the Department has since modified its approach to the project and that the renewed system "will be delivered on time and within budget." (39:9) The Committee was gratified to receive these assurances.
III. CONCLUSION
The procurement and use of materiel is one of the federal government's costlier activities. It is therefore of vital importance that this activity be properly managed in order to keep costs to government and the taxpayers who fund it to a minimum. At the same time, these resources have to be intelligently managed in order to ensure that they deliver maximum value.
Based on its review of the Auditor General's audit of materiel management practices in four departments and agencies and the role of Treasury Board Secretariat in this area, and on meetings with witnesses, the Committee is encouraged by progress that has been made. To ensure that the initiatives that are under way produce the desired results, the Committee believes that certain key steps must be taken. In particular, Treasury Board Secretariat must define its mandate clearly with regard to materiel management, accountability relations must be clarified, departments must develop systems that can record the right information on materiel use and holdings, and an appropriate disposal regime must be established quickly. The Committee firmly expects that its recommendations, combined with those made by the Auditor General, will help to ensure that public resources consumed by this aspect of what the federal government does will not be wasted.
Pursuant to Standing Order 109, the Committee requests the Government to table a comprehensive response to this Report.
A copy of the relevant Minutes of Proceedings (Issue No. 3 which includes this Report) is tabled.
Respectfully submitted,
MICHEL GUIMOND
Chair
Thursday, April 17, 1997
The Standing Committee on Public Accounts has the honour to present its
EIGHTH REPORT
In accordance with its Order of Reference of Thursday, February 20, 1997, your Committee
has considered Vote 30 under FINANCE in the Main Estimates for the fiscal year ending
March 31, 1998 and reports the same.
A copy of the relevant Minutes of Proceedings (Issue No. 3 which includes this Report) is
tabled.
Respectfully submitted,
MICHEL GUIMOND
Chair
Wednesday, April 23, 1997
The Standing Committee on Public Accounts has the honour to present its
NINTH REPORT
Pursuant to Standing Order 108(3)(d), the Committee considered Chapter 17 of the September 1996 Report of the Auditor General of Canada (Human Resources Development Canada--Canada Pension Plan: Disability). The Committee held one meeting on this subject, on December 12, 1996, with representatives of the Office of the Auditor General and Human Resources Development Canada (HRDC).
As its name indicates, Canada Pension Plan: Disability (CPPD) is a component of the Canada Pension Plan (CPP), itself a component of Income Security Programs. CPPD benefits represent approximately $3 billion, or 18% of total CPP payments. Since 1995, HRDC has been regionalizing its operations. CPPD operations now come under the responsibility of the Regional Branches, which report to the Deputy Minister (DM) on all departmental activities in their respective regions.
Eligibility for CPPD benefits is conditional: beneficiaries must (1) be between 18 and 65 years of age; (2) have contributed to the CPP for at least two of the last three years or five of the last 10 years before the date of the disability; (3) have been declared disabled according to the definition adopted by the CPP; and (4) apply in writing on the prescribed form. In 1996, disability benefits varied from $326 to $871 per month. Under certain conditions, beneficiaries may also be eligible for benefits for dependent children.
The number of CPPD beneficiaries rose from 155,000 in 1986-87 to nearly 300,000 in 1995-96, an increase of 93% and a compound annual rate of growth of 6.8%. In comparison, the labour force increased at a compound annual rate of growth of 1.1%. This phenomenon is not unique to Canada and has been observed in a number of other industrialized countries. Private-sector organizations working in the field of disability insurance have also seen a significant increase in the number of their clients.
Given this significant increase in costs, some observers may be led to believe that cost reduction necessarily means stricter eligibility criteria. The Committee wants to make it quite clear from the outset that it does not share that opinion. The Committee agrees with the Auditor General (AG) that it is possible to reduce CPPD costs considerably, through additional efforts to improve its management, without causing any prejudice to applicants who meet the eligibility criteria. At the meeting, the Committee noted that there were a number of areas where improvements to CPPD management could be made.
The Committee wants to emphasize that, at the meeting, HRDC DM Mel Cappe stated that HRDC agreed with most of the AG's recommendations. He added that HRDC was well aware that CPPD costs were rising and that the public was losing faith in CPPD's long-term viability. He noted that HRDC had taken measures in order to solve this problem. However, he added:
Even with our initiatives to date, our department recognizes and accepts the challenge to improve certain aspects of the management of the program. In fact, we have appointed a senior departmental manager to head a special project [. . .]. It will coordinate and monitor the implementation of the measures already in progress, as well as new initiatives to address the Auditor General's recommendations (37:4).
HRDC also submitted to the Committee an action plan with eight priorities. The action plan notes present and future measures by HRDC in response to the AG's observations. Over half these measures are to be implemented by March 1997, and nearly all by March 1998. The DM made a commitment to provide the Committee with interim reports on its action plan in April 1997 and April 1998.
The Committee is of the opinion that the action plan clearly shows HRDC's will to manage CPPD better, and encourages HRDC to pursue its efforts to this end. However, the Committee believes that implementing the action plan cannot solve all HRDC's management problems. As the AG summarized the situation at the meeting:
An action plan cannot change the culture of an organization on its own. To successfully implement the changes that are required, management of the department and of CPP must show leadership by setting out the general policy direction they intend to follow with disability. This would require such measures as, first, demonstrating determination and continuity with respect to corrective measures that need to be implemented even in a context of rapid change; second, deciding whether proactive management is required with respect to this very large caseload; third, redoubling efforts to obtain closer cooperation among interested stakeholders; and finally, encouraging staff to be attentive to the better management practices of other plans (37:2).
It is clear to the Committee that better CPPD management does not mean a witch hunt for abusers of the system. It is of the utmost importance that program managers remain understanding at all stages of the process. Nevertheless, the persons receiving benefits under the program will be the main ones to benefit from improvements to it: faster application processing and less paperwork will ensure easier access.
In this respect the Committee recommends the following:
That, in developing an official quality control program, HRDC develop performance indicators to determine whether HRDC is achieving the program's objectives. HRDC is to inform the Committee of these indicators in the April 1998 interim report on its action plan;
That HRDC increase the exchange of information with workers' compensation boards, provincial social service departments, and private insurance companies with the view of increasing the efficiency of the program; and
That HRDC evaluate the possibility of making greater rehabilitation efforts in order to allow more beneficiaries to benefit from the rehabilitation program.
Pursuant to Standing Order 109, the Committee requests the government to present a comprehensive response to this Report.
A copy of the relevant Minutes of Proceedings (Issue 3 which includes this Report) is tabled.
Respectfully submitted,
Michel Guimond
Chair