We are very pleased to be here today to present my fifth status report, which was tabled in the House of Commons yesterday. I am also pleased that we're reporting satisfactory progress in five areas.
As you noted, I am accompanied by four assistant auditors general: Richard Flageole, who was responsible for the passport audit; Nancy Cheng, who was responsible for the audits on the social insurance number and the National Research Council; Andrew Lennox, who was responsible for the coast guard audit; and Lyse Ricard, who did the audit on heritage properties.
Status reports are particularly important because they show what departments and agencies have done to address recommendations from a selection of our past audits. In determining whether progress is satisfactory or unsatisfactory, we take into account the complexity of the issue and the amount of time that has passed since the original audit.
[Translation]
The Status Report shows how departments and agencies have acted on our concerns in seven specific areas. We revised the management of advertising and public opinion research activities, federal built heritage, leading-edge research, the Coast Guard's fleet and marine navigational services, passport services, the social insurance number, and international taxation.
[English]
Let me turn now to the areas where progress has been satisfactory.
I will begin with the management of advertising and public opinion research. Given the serious weaknesses that we identified in our 2003 audit of government advertising activities, this year's findings are good news.
We found that Public Works and Government Services Canada has made satisfactory progress in ensuring that advertising and public opinion research contracts are awarded in a fair and transparent manner. It used a competitive process to establish a pool of qualified firms who can provide advertising and public opinion research services. The process for choosing the agency of record was fair and transparent.
Departments have made satisfactory progress in ensuring that they plan for advertising activities and manage suppliers in accordance with the communications policy of the Government of Canada. I am pleased that the government did not create new rules and controls as a response to our previous report. Instead, it focused on following the rules that were already in place.
[Translation]
There was also progress in the area of international taxation. The globalization of the economy and growth in international investment have a significant impact on the taxes owed to Canada. This affects Canadian residents doing business abroad as well as non-residents earning income in Canada.
The use of tax havens by Canadians and abuse of tax treaties with other countries could divert tax away from Canada, and the amounts at risk could be significant. For example, the Canada Revenue Agency estimates that in 2005, Canadian corporations conducted $1.5 trillion in transactions with related parties in foreign countries. Non-residents paid over $4.9 billion in taxes last year on income earned in Canada.
We found that the agency is now better able to identify potential non-compliance with the tax rules on international transactions. It has taken steps to detect aggressive international tax planning schemes and has directed more resources to auditing international tax avoidance.
However, in some of the tax offices handling the highest-risk files, the agency still lacks sufficient expertise in international tax auditing. Taking into account the difficulty of retaining sufficient expertise, the agency needs to develop a consistent national approach to auditing taxpayers with international transactions.
[English]
Another area where globalization has a significant impact is passport services. In 2005, we reported that the passport office, now Passport Canada, was struggling to meet higher expectations for security and growing demands for service. Since then, it has dealt with an unprecedented demand, issuing over three million passports in 2005-06. High-demand pressures will continue, given the more stringent U.S. requirements for passports.
I am pleased at the progress Passport Canada has made in the relatively short time since our 2005 audit. The agency has clearly directed a major effort toward resolving the problems we had identified. For example, examiners now have appropriate tools and training to determine whether identity documents provided with passport applications are authentic. Passport Canada has also significantly enlarged its watch list and has used the information to refuse applications or to investigate them further.
But Passport Canada still has some major issues to resolve, particularly in the areas of security and identity verification. It faces a complex undertaking that will need the full cooperation of other government organizations at the federal, provincial, and territorial levels.
[Translation]
We also examined the progress made by the National Research Council in its management of leading-edge research. The NRC is the federal government's largest research organization. I'm pleased with the progress it has made toward implementing the recommendations from our audit in 2004.
The appointed council that governs the NRC's operations has strengthened its role, and the NRC's research institutes have taken steps to improve the way they manage research projects. We also noted satisfactory progress in several human resources management initiatives.
But action on some of our recommendations was delayed while the NRC laid the foundation for its new corporate strategy. It is important now that the organization meet its own milestones so it can fully address our recommendations.
[English]
Moving on to the conservation of federal built heritage—that is, historic buildings, battlegrounds, forts, and so on—I am pleased that Parks Canada has made satisfactory progress in addressing the concerns we raised in 2003 on the need for better protection of our built heritage. The agency has proposed a policy to strengthen the legal protection of federal built heritage and has improved its management tools.
Nevertheless, not all the problems have been resolved. The fate of heritage sites and buildings in the custody of federal organizations other than Parks Canada remains uncertain. The loss of heritage buildings and sites means that future generations will no longer have access to significant aspects of our history. It is therefore important that the federal government strengthen its conservation regime for built heritage. It also needs to set priorities to decide which heritage buildings and sites should be preserved.
[Translation]
Now let me turn to areas where we found unsatisfactory progress in implementing recommendations from previous reports. In those two areas, the problems are long-standing.
Let's start with the management of the social insurance number, which is used to issue billions of dollars in federal benefits to Canadians. It is also used widely outside the federal government. Even though Human Resources and Social Development Canada has improved several aspects of its management of the Social Insurance Number, two important issues, first reported nine years ago, remain unresolved.
First, the department cannot be sure of the quality of the information it retains in the social insurance register, the data base of personal information provided by everyone who has been issued a social insurance number. The department does not have goals for the quality of the information and does not measure it systematically.
Second, the policies on how federal departments may use the social insurance number are still unclear. This has led to inconsistent interpretations of the rules, which make it difficult for departments to ensure they use it appropriately.
This is the fourth time since 1998 that we have reported these two problems. The government should have resolved them by now. Good management of the social insurance number—including clear guidance on its use in the federal government—is more important than ever, in light of security concerns and the growing incidence of identity theft and fraud.
[English]
The other unsatisfactory area is the management of the coast guard fleet and marine navigational services. I am concerned that the coast guard has not solved long-standing management problems. It has not responded adequately to recommendations made a number of years ago, and many of the problems cited in our report are in fact similar to those raised in a 1983 audit.
The coast guard still operates largely as five regional coast guards, each with its own way of doing things. It has not become the strong national institution the government expects it to be.
Canadian mariners, like others around the world, also rely more and more on electronic navigation. While the coast guard is introducing new marine navigation services, it has been unable to develop strategies for traditional aids such as buoys and light stations, which are costly to maintain and operate and no longer serve their original purpose.
The coast guard has a history of failing to complete initiatives, partly because it takes on too much at once. It needs to decide on a few of the most urgent priorities and then get the job done.
[Translation]
In conclusion, audit by nature focuses on areas in need of improvement. I am very pleased to see that our work made a difference. This Status Report shows that the government has taken satisfactory action in the majority of the areas we revised this year.
[English]
Success can be attributed mostly to the setting of priorities, a strong commitment from senior management to achieve them, clear action plans, and support in the form of adequate resources to achieve the goals. Credit is due to the many public servants who have worked hard on resolving these issues.
Mr. Chair, my colleagues and I would now be pleased to answer any questions that committee members may have.
Merci.
:
Thank you, Mr. Chairman.
Good afternoon, Ms. Fraser. And good afternoon to your team.
Ms. Fraser, in your opening statement, and in reference to chapter 1 dealing with advertising and public opinion research, you referred to progress which has been satisfactory. You stated the following:
Given the serious weaknesses that we identified in our 2003 audit[...] this year's findings are good news.
I don't entirely share the same interpretation. Because the situation was very bad and has now improved, you said that things are better now. And yet, in two places in your report, you clearly state that progress is unsatisfactory, especially when it comes to the Government of Canada's Communications Policy. Under this policy, departments must submit research project descriptions to Public Works and Government Services Canada and advise it in advance of any research activities being contemplated.
In 2003, 20% of department officials involved in such projects did not comply with this policy. And yet, based on your research, there was no progress made in this regard. 80% of people complied and 20% didn't. So we are at square one.
Once again, according to the Government of Canada's Communications Policy, departments must submit work plan descriptions before commencing work to Public Works and Government Services Canada. You carried out a contract-value-based assessment and it turns out that the situation in that regard is even worse: for contracts over $200,000 I think, this directive wasn't complied with in 60% of cases. There was an 85% non-compliance rate for small contracts. To my mind, the problem is big enough to cast doubt on what you consider to be an improvement.
It's possible that considerable improvements have been made in some areas but there are still a number of gaps. Department and program officials could conduct a poll which may be used for unjustifiable political purposes.
Were the same activities and the same departments involved in each instance of non-compliance with the Government of Canada's Communications Policy?
:
I have to say that I was really surprised to see this, given the fact that everything—security, military—has had lots of attention and lots of money over the last few years, and this is being treated almost like a poor cousin.
And yet we have huge coastal waters. I think we have the longest coastal line possibly in the world if you take in all our inland waters on the Great Lakes. I mean, that's part of their responsibility.
I want to put this on the record so people can understand at a practical level what this means for Canadians, as some people see it. David Walsh, who is the president of the Dartmouth local of the Union of Canadian Transportation Employees, said this yesterday:
It's the union's opinion that if something like the Swiss Air disaster happened again, we wouldn't be able to answer the call, because we have less vessels right now.
I don't know what kind of labour relations are currently going on, and I'm sure some might suggest there's something there, but that's a pretty stark assessment from the very people whom we call on to go out and respond.
Definitely, Chair, given that there are only two out of all of these that are unsatisfactory, I would assume that this would be one. Certainly I would hope we're making that argument, because there's a lot there.
On social insurance—and it's already been raised a couple of times—I want to come back again to this issue of things that have been raised before and not done. I'm looking specifically at page 16, where you say in 6.37,
The Department has had access to immigration data since 1996. In 2004 the Department—reported that obtaining electronic access to citizenship data was delayed pending a major systems upgrade by Citizenship and Immigration Canada, expected at that time to be complete in 2006. The Department informed us that it had begun discussions with Citizenship and Immigration Canada in August 2006—
Now, I don't know how you can do a whole system by a target deadline of the end of 2006 when you don't even start talking to the people who you're going to reconfigure your computer system for until August of 2006. Did they give you any satisfactory explanation?
:
You see, I know there's a lot of noise out there...and I'm sure some of it's warranted. It's happening in the U.S. too. Once you've done everything you can on the right wing to go after tax cuts, and to get as much as you can when you already have lots, then you go after the revenuers with talk of “unfair”, and try to put a chill in there.
Again, it's not the steelworkers in Hamilton who are raising this. It's the people with the big bucks already who are doing this. And my concern is that the areas that aren't being looked at just happen to be the areas where the most wealthy are. We know what the history of money and politics has been in Canada. Notwithstanding the changes in the last couple of years...but historically, and these are historical issues.
That's what gives me some concern. It's not deliberate, but it met certain unspoken political priorities, that we just won't do a whole lot in that area because we get too much heat when we do; let's go elsewhere.
So this is a concern for me. Every time I hear “tax haven”, I think of all the shipping lines and others who've taken advantage, as Canadians, of these tax havens. Basically, they're just not paying their fair share of the tax rate. I don't know how we would go about that.
One thing I want to talk to you about, Chair, is the possibility...and we've never done this before, so if it's a non-starter, so be it.
Right now when we call up a chapter we bring in the deputy, and they bring in all their folks, and the Auditor General comes in with all her folks, and we spend the whole two hours doing that one chapter. But let's say we have a couple of questions where a full two hours may not be required but you don't want to let something go. I wonder if there's a method or some means whereby, for issues that don't have a requirement for two hours, we could look at bringing in two of them, at an hour each, just to get at a few things. Because something like this....
Again, think of all those hard-working Hamiltonians—Mr. Sweet represents Hamiltonians also—paying their fair share and carrying the freight, and then think of the possibility whereby those who are already dripping in wealth don't have to pay their fair share. If we don't jump in and defend those hard-working Hamiltonians, who will?
I leave that with the committee to think about. Maybe there's a second way you can do that.
If I have any time left, I'd like to go to advertising and public opinion. We haven't done that yet.
:
Thank you, Chair, for the generosity in time.
In order to ensure that the public accounts committee is fully able to get to the bottom of the serious criminal issues surrounding the findings of the Auditor General in chapter 9 of the report of November 2006, “Pension and Insurance Administration—Royal Canadian Mounted Police”, I move that the following people appear as witnesses before us next Monday.
The witnesses mentioned in my motion are as follows. The first is Staff Sergeant Ron Lewis. Staff Sergeant Ron Lewis will relate his allegations of a cover-up of the criminal internal investigations. These include delays and obstruction by Commissioner Zaccardelli.
Denise Revine, a public service employee, will testify about how she discovered evidence of wrongdoing by senior executives within the human resource directorate in relation to the RCMP pension fund. The most incredible part of her testimony will be her account of the actions taken by the RCMP to remove her, through constructive dismissal, from her position as an example to others who might be thinking of coming forward and whistle-blowing in the RCMP.
Chief Superintendent Fraser Macaulay was the director general of organizational and renewal effectiveness when allegations were brought forward in 2003. The formerly mentioned Denise Revine reported directly to him. The chief superintendent's superiors initiated a bogus internal investigation against the chief superintendent after he requested an investigation concerning one of the major subjects of this investigation.
Staff Sergeant Steve Walker, who is one of the lead investigators of the criminal investigation of the RCMP pension fund, will inform the hearing on how the investigation escalated due to the numerous violations uncovered, to the point that the RCMP had to take over the investigation. He will highlight the extent of violations, the amount of funds misappropriated, and related matters.
Staff Sergeant Mike Frizzell was seconded to the investigation and became the lead investigator for the RCMP on the insurance plan investigation. He'll outline the extent of the insurance plan investigation, including types of violations and amount of funds involved, and he'll also relate the roadblocks he encountered, his sudden removal from the investigation, and the shutting down of the investigation within days of his removal.
Finally, there is Assistant Commissioner for the RCMP David Gork. About halfway through the criminal investigation, during its most crucial stage, Assistant Commissioner Gork was transferred from this investigation and seconded to Interpol in Lyons, France. This was a significant development. Investigators will indicate that the investigation took a downturn in intensity after the announcement of the Gork transfer. He'll be able to shed some light on who made decisions regarding how the criminal investigation was set up, funded, and controlled, and why a parallel RCMP investigation was not conducted simultaneously, why it took fifteen months before that in fact took place, and at that point, how, because of the delay, the limitation of action expired and no member of the RCMP could be charged.
:
Thank you, Mr. Chairman,
I'm coming at this because I think the motion is out of order and ask you to consider the point.
In his motion Mr. Wrzesnewskyj asks the public accounts committee to get to the bottom of serious criminal issues. Mr. Chairman, as far as I'm aware, no charges have been laid. There may be some allegations of criminal activity here, but if no charges have been laid, why are we dealing with serious criminal charges?
In Mr. Wrzesnewskyj's opening remarks, he talked about bogus internal investigations, funds misappropriated, types of violations, criminal investigations, and so on, with absolutely no proof or substantiation of any kind.
Mr. Chairman, as I've said many times, the public accounts committee is an institution of accountability. We're not an institution of management or investigation. We are not here to take over where the RCMP, the City of Ottawa police, or anybody else failed. Our job is to hold the government accountable before Parliament.
Now there may be reasons why no criminal charges were laid. We may want to find out why no criminal charges were laid, but I'm not interested in any way, shape, or form in approving a motion that talks about serious criminal issues and in bringing people forward to talk about bogus internal investigations and funds misappropriated when no charges have been laid and no charges may ever be laid.
Now, if Mr. Wrzesnewskyj wants to go down this road, I say he goes down this road by himself. It seems as though he's talked to everybody involved and has the whole story, so why are we being involved? It's not our job, Mr. Chairman.
Therefore, I would ask that you rule the motion out of order. If there's a failure to do that, we should defeat the motion as it's currently presented.
I have probably a little more sympathy for Mr. Wrzesnewskyj's motion than Mr. Williams does, because I think the matter, number one, is rightly before us. Number two, just because there haven't been charges laid doesn't mean there aren't areas we should be going into to find out what's going on.
Certainly Mr. Williams would be the first to recollect the sponsorship scandal, and how it began and where it went. Ultimately it led to criminal charges, but it didn't start with that. The matter is rightly before us via the Auditor General.
Through you, Chair, my only concern to Borys is that we had a bit of a debate on this once before, where Mr. Wrzesnewskyj attempted to have certain police documents and investigative reports brought in. We determined that we really weren't there yet. If my memory serves me correctly, the majority of us supported a motion that would have had the RCMP commissioner and the police chief for the Ottawa Police Service come in.
If I didn't say it, certainly my intent was that if we aren't satisfied with what we hear there, I am quite prepared to entertain further action, maybe along the lines that you introduced earlier, but perhaps other things—and I find that this fits in that category.
You seem to know a lot about the story, and that's fine; you've done your homework. If you can pose questions that can't be adequately and thoroughly answered by the two police officers here at the table, then that would beg the question, how do we get those answers? At that point, your suggestion today and your previous one to me are back before us as options.
But I see this very much as either we get the answers we want, we're satisfied, and its over when they come in, or it's not satisfactory and there is a tacit understanding that, if so, we will dig further—and this may include going in that direction.
So for that reason, Chair, I don't find myself in a position to support this now. But I do give assurances to my colleague that if we don't get the answers from our invited witnesses, I am prepared to take further action to bring in those needed to get to the bottom of this.