PACC Committee Meeting

STANDING COMMITTEE ON PUBLIC ACCOUNTS

COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 24, 2000

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[English]

The Chairman (Mr. John Williams (St. Albert, Ref.)): Good afternoon, everybody.

Today the orders of the day are, pursuant to Standing Order 108(3)(e), consideration of chapter 17 (Canada Infrastructure Works Program: Phase II and Follow-Up of Phase I Audit) of the September and November 1999 Report of the Auditor General of Canada; pursuant to Standing Order 108(3)(e), consideration of chapter 23 (Involving Others in Governing: Accountability at Risk) of the September and November 1999 Report of the Auditor General of Canada; and pursuant to Standing Order 108(3)(e), consideration of chapter 24 (The Canadian Adaptation and Rural Development Fund: An Example of Involving Others in Governing) of the September and November 1999 Report of the Auditor General of Canada.

Today the witnesses are, from the Office of the Auditor General, Mr. Denis Desautels, the Auditor General of Canada; Ms. Maria Barrados, the Assistant Auditor General; and Mr. John Mayne, principal of the audit operations branch. And from the Treasury Board of Canada Secretariat, Mr. Richard Fadden—

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): A point of order, Mr. Chairman.

The Chairman: I beg your pardon?

Mr. Benoît Sauvageau: Good afternoon. How are you?

The Chairman: Yes, sir.

Mr. Benoît Sauvageau: If we do not have quorum, can we hear the—

The Committee Clerk: Yes, because there are five of you.

Mr. Benoît Sauvageau: Wasn't it nine? Does it change like the exchange rate?

The Clerk: That is the number needed to pass a motion. To hear witnesses, it is different.

Mr. Benoît Sauvageau: Very well. I thought it was nine. Yesterday, it was nine, but it changes like the value of the dollar. So there is no problem.

The Chairman: There are six members; we have quorum.

Mr. Benoît Sauvageau: I did want these important witnesses to be speaking in a vacuum.

[English]

The Chairman: No, and we wouldn't want to count them in quorum either. But we're fine.

Continuing on, from the Treasury Board of Canada Secretariat, we have Mr. Richard Fadden, the assistant secretary of the government operations sector; Mr. Tom Fitzpatrick, senior policy officer, service and innovation; Mr. Ralph Heintzman, assistant secretary, service and innovation; Mr. Toby Fyfe, director, alternative service delivery, service and innovation; and Dr. E.L. Shipley, director general, information management and program operations. Welcome, all.

We'll start off with the opening statement by Mr. Desautels, please.

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Mr. L. Denis Desautels (Auditor General of Canada): Thank you, Mr. Chairman, for the opportunity to discuss our work on the three chapters tabled last November.

As auditors on behalf of Parliament, an important part of our role is to monitor areas of government where there are threats to accountability or an erosion of Parliament's ability to scrutinize federal public policy. Some of our recent audits have raised concerns about accountability in new program arrangements where important aspects of the delivery of federal programs have been shifted outside the federal government. These new governance arrangements are growing in number, and their magnitude is striking—over $5 billion in federal dollars is now spent annually through these arrangements.

These arrangements call for new ways of holding the federal government accountable. This issue may seem theoretical, but it has important real consequences for the way federal programs are managed and how Parliament scrutinizes them. In my view, this is one of the most important issues facing Parliament, and it needs to be addressed head-on.

Over the last decade, the face of government has changed substantially. The government is increasingly partnering with other levels of government and with the private and voluntary sectors to deliver its programs and services. In the 1998 and 1999 budgets, the federal government even created two independent, not-for-profit partners mandated to pursue its objectives: the Canada Foundation for Innovation, and the Canada Millennium Scholarship Foundation. The social union framework agreement signals an intent to enter into more partnering arrangements with other levels of government.

[Translation]

What concerns me, Mr. Chairman, is not the fact that new governance arrangements exist. On the contrary, many of them can be highly beneficial, provided they are properly implemented. An important aspect of this is ensuring appropriate accountability to Parliament and to the Canadian public for the federal policy purposes these arrangements pursue. It is not easy to arrive at an appropriate, acceptable accountability regime when a joint program is delivered under the separate authority of federal and provincial partners. Nor is appropriate accountability obvious when a partner operates beyond the public sector under the Canada Corporation Act or the Canada Business Corporations Act.

First, let me focus on Chapter 23, which deals with these new governance arrangements.

At the start of our audit, we discovered that the government did not know how many of these arrangements exist, what form they take or how much federal money they involve. Consequently, we undertook a government-wide survey and found that 77 new arrangements have been created since 1990. And this trend is on the rise. As I have already said, they spend over $5 billion in federal funds a year.

These arrangements take two forms. In delegated arrangements, the federal government gives an outside organization discretionary authority over program delivery, including key functions like planning and decision-making. There is no direct accountability by federal ministers and often there is little reporting back to Parliament on the use of federal funds or federal authority. Federal funding for delegated arrangements is usually provided through grants with few or no strings attached, or through contribution payments, which impose certain conditions on performance.

Our audit found weaknesses in the governing frameworks of many delegated arrangements. For example, performance expectations have not been established for the Canada Foundation for Innovation, and there is no requirement for reporting its performance to Parliament.

[English]

The Canadian Adaptation and Rural Development Fund, the subject of chapter 24, is another delegated arrangement. For the most part, we found that Agriculture and Agri-Food Canada had developed controls for this arrangement that provide for appropriate accountability. This shows that it is possible to strike a reasonable balance between giving industry councils freedom to make decisions and respecting the need for accountability for public funds.

Collaborative arrangements are the second form of new governance arrangements. The federal government shares key functions with partners that may include policy-making and planning, but a responsible federal minister still oversees federal involvement in the arrangement. The labour market development agreements between the federal government and provincial governments are an example. Federal funding of collaborative arrangements is usually provided through contribution payments.

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A collaborative arrangement that has given me some concern is the Canada Infrastructure Works Program, initially a temporary program by the federal government to stimulate additional investment in local infrastructure and direct job creation. In this case, the federal government was responsible for approving joint funding for the projects proposed by provinces. Provincial governments were responsible for day-to-day operations and program delivery.

In our view, the Canada Infrastructure Works Program did not appropriately balance the need for initiative flexibility with adequate accountability for the way the money was spent and for the results the projects achieved. As we state in chapter 17, our audit of phase two of this program found that from an overall federal perspective, the program was essentially running on trust, with little accountability. Criteria for project selection were not clearly defined, and many of the files we reviewed lacked persuasive evidence to justify claims by applicants that they met selection criteria.

[Translation]

Chapter 25 of our December 1998 Report on Transport Canada, entitled "Investments in Highways", identified a number of similar concerns about the department's collaborative agreements with the provinces to help fund highway projects. Overall, we found that Transport Canada administered its highway investment programs more like grant programs than the contribution programs they are. We also found that the department assigned too few resources to this area and provided little or no support to guide and facilitate the work. Not surprisingly, the department did not do much of what it was required to do under the programs. The lessons learned from these audits should be applied when government is designing future program activities, to ensure that they will be well managed and provide proper accountability.

Chapter 23 describes, based on our own work, essential elements of an effective governing framework for all new governance arrangements. Briefly, these include appropriate reporting to Parliament and the public on the arrangement's spending and its performance toward its objectives; effective accountability mechanisms to ensure that adequate evaluation and audit regimes are established; adequate transparency of important decisions; and mechanisms to protect the public interest such as vehicles for citizen complaints and redress.

[English]

The collaborative and delegated arrangements we examined were not always created with these elements. The committee might want to ask the Treasury Board Secretariat about progress in developing a framework for departments to use when they design new governance arrangements. We believe that members of Parliament should be consulted to ensure that their concerns about accountability are addressed within the framework. The committee might also consider asking departments to review their existing arrangements, and where there are gaps in the governing frameworks, provide plans for corrective action.

We think it's important that Parliament insist on proper accountability from new governance arrangements. Parliament needs information to determine whether these arrangements are working, whether public money and resources are being used wisely, and whether the public interest is being well served. Parliament needs to be able to scrutinize the use of federal authority and the spending of federal funds, whether the decision-maker acting for the federal government is a federal official, a provincial official, or a private or voluntary organization.

Parliamentarians should be given the opportunity to review accountability, transparency, and mechanisms for protecting the public interest when considering legislation to create new arrangements that are outside the reach of traditional mechanisms like the Financial Administration Act. It's equally important for Parliament to regularly scrutinize whether these arrangements are properly accountable. The committee could play a pivotal role in encouraging the dialogue with members of Parliament.

In conclusion, Mr. Chairman, the challenges raised in these chapters are not insurmountable. I applaud the important progress made in some of these areas, although much work needs to be done.

We would welcome, of course, the opportunity to answer the committee's questions. Thank you.

The Chairman: Thank you, Mr. Desautels.

We'll now turn to Mr. Fadden for the opening remarks of the Treasury Board.

[Translation]

Mr. Richard B. Fadden (Assistant Secretary, Government Operations Sector, Secretariat of the Treasury Board of Canada): Thank you, Mr. Chairman, and thank you for inviting us here today.

I am pleased to provide you with an overview of the Canada Infrastructure Works Program and to answer any questions you may have.

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[English]

Canada Infrastructure Works was at the leading edge of intergovernmental collaboration in the effective delivery of a trilateral program. Launched in 1994 as a short-term solution to the pressing problems of high unemployment during a period of quite low economic growth, the partnership of the federal government, provincial and territorial governments, municipalities, and other local participants has been, we believe, a great success.

[Translation]

The federal government's contribution of $2.4 billion has leveraged more than $8.3 billion in investments in nearly 17,000 infrastructure projects across Canada.

CIWP has been praised by our provincial, territorial and municipal partners as an effective and innovative program that has addressed municipalities' need for assistance to upgrade local infrastructure.

As well, the Auditor General states in his report:

provincial and federal program officials in every province audited declared the program a success in creating positive federal- provincial relations and directing funds to needed infrastructure investment.

[English]

Investments in core infrastructure—water, sewer, road, bridges—accounted for about 62% of the funds spent, leading the way in creating jobs in the construction sector. Infrastructure investments in buildings accounted for some 31% of eligible costs and included educational, community, municipal, and other buildings, such as health care facilities.

I'd like to give you some examples of the tangible economic and social benefits the program has brought to the citizens and communities across Canada.

[Translation]

The Annacis Island sewage treatment facility in British Columbia, with total cost of $207 million, was the largest single project funded under the program. This project has resulted in a significant improvement to the environment by addressing wastewater treatment on the Fraser River.

[English]

Under phase two of the program in Ontario, $135 million, with a one-third federal share, was allocated to projects involving construction and renovation to health care facilities, half of which are for the long-term care of seniors.

[Translation]

CIWP projects have helped to make more Canadians computer literate and improved their access to the Internet. In New Brunswick, the program has allowed the implementation of a computer network linking all of the provinces elementary schools. In Manitoba, rural and urban libraries had been linked via a network that allows broader access to information, particularly to those in remote communities.

Much-needed recreational and community facilities and services have been made possible, such as a new regional civic centre in Cornerbrook and the renovated downtown Montreal YMCA. A shelter for abused women and their children was renovated in the Northwest Territories.

[English]

Levered private sector investments have benefited several sectors of the economy, including the tourism industry, the manufacturing sector, and the cultural and performing arts sectors. Both the Toronto International Trade Centre and the Quebec City Congress Centre were realized through federal contributions under CIWP.

A project in P.E.I. gave citizens access to the 911 emergency system, and a telecommunications project provided northern British Columbia communities with much-needed services.

Many facilities have been brought up to building code standards, such that they now allow access to the handicapped. In Saskatchewan, the program allowed the construction and upgrading of 2,300 kilometres of rural roads. In rural Newfoundland, many citizens now have a safe and reliable water source.

[Translation]

The program's multilateral approach to public sector program delivery is very much in the new alternative service delivery mode. Each of the contributing orders of government involved has his own unique role, responsibilities and competencies.

The program was therefore designed in such a way as to avoid overlap, building on the expertise and know-how of each partner. This resulted in efficient program delivery that is in keeping with modern concept of risk management.

[English]

Our admittedly non-traditional approach took into account that each of the three orders of government involved had investments at stake, each was competent to effect its part of the collaborative program delivery, and each had audit and evaluation capabilities, as well as political oversight.

As we said in the management response to the Auditor General's report, the chapter does not reflect what a highly successful program it was in terms of results and how it made a positive contribution to federal-provincial-municipal relations in Canada.

[Translation]

We note that most of the Auditor General's recommendations are oriented towards "future programs of this type". The Speech from the Throne announced that there will be a new physical infrastructure program starting in 2001, although it will not be a direct repeat of CIWP.

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[English]

We will carefully consider the Auditor General's recommendations in the design of the new program, although its final form will, of necessity, also have to reflect the views of our provincial and territorial partners on all aspects of program design and delivery.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Fadden.

I understand we also have an opening statement from Mr. Ralph Heintzman from the Treasury Board Secretariat. Mr. Heintzman.

Mr. Ralph Heintzman (Assistant Secretary, Service and Innovation, Secretariat of the Treasury Board of Canada): Thank you, Mr. Chairman.

I too welcome the opportunity to meet with the committee today to discuss alternative program and service delivery arrangements and to answer any questions the committee might have.

New program and service delivery arrangements are increasingly used as an effective alternative means of meeting federal public policy objectives. Government believes in proper accountability for the expenditure of funds and is committed to developing the most appropriate management framework for these arrangements.

The Treasury Board Secretariat agrees with many of the principles suggested by the Auditor General of Canada concerning governance and accountability of these arrangements.

[Translation]

Regardless of how government organizes to deliver programs and services to Canadians, Parliament should be able to hold these entities to account through the appropriate minister. It is important to ensure: credible reporting that links objectives and funding to measurable results; effective accountability mechanisms that define clear roles, responsibilities, expectations, capacities to deliver as well as the ability to monitor and review; adequate transparency both to the public and Parliament and provision for the protection of the public interest.

In building the most appropriate accountability framework for new delivery arrangements, it is necessary to balance many factors and interests.

These arrangements cut across multiple jurisdictions, policy and management frameworks and often extend beyond Treasury Board's authorities. Many do not come before Treasury Board ministers for review and approval.

[English]

New program and service delivery arrangements involve a variety of non-federal stakeholders. For example, in partnerships with the provinces, it's appropriate to recognize the legitimate role they play as equals in many of these arrangements. Any accountability framework must be sensitive to and respect the interests of all partners. It should also show respect for the role of Parliament and ministers in determining appropriate governance and accountability provisions.

What is needed is a renewed policy framework for government officials and political decision-makers. They can use such a framework as a guide to develop appropriate governance and accountability provisions for new service and program delivery arrangements. As I've said, it's important that these arrangements are accountable to the government, to Parliament, and ultimately to the citizens of Canada.

So how will we achieve these objectives? In the secretariat's response to chapter 23, we indicated that we are in the process of renewing the alternative service delivery policy framework. This framework will outline the basic principles that should be followed in implementing new service and program delivery arrangements. As part of this exercise, we're also developing a management practices guide and database that will be available, among other things, on the Internet.

These two instruments will do a number of things. They will set out the core public interest tests to assist decision-makers in determining whether specific initiatives are in the public interest. They will integrate central agency policy guidance, and they will also capture departmental best practice for a variety of types of alternative service delivery initiatives, including the new governance arrangements the Auditor General has described.

The renewed framework will reflect the environment I've described and will respect the government's preference for a case-by-case approach to these arrangements based on a broad set of principles.

The new framework and these tools will be evergreen. They will evolve over time to reflect current issues and experience across the wide range of public policy.

The secretariat is developing these products by drawing on experience and information from across the government and through extensive consultation. Following this consultation, the framework will be submitted to Treasury Board ministers, and if approved will form government policy.

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The secretariat will also continue to improve the departmental performance reports to Parliament. Among other things, they will integrate achievement of measurable results through partnerships. Through these and other initiatives we expect to develop and keep current a modern, results-based accountability framework for these kinds of arrangements.

One objective is to strengthen accountability for new program delivery arrangements. Another is to preserve the authority of Parliament and the government to decide what is in the public interest. The framework should help decision-makers to decide the merits of each specific case under consideration.

These initiatives I've outlined will address the concerns of the Auditor General, and once implemented they will help to strengthen accountability for new alternative program and service delivery arrangements.

The Chairman: Thank you very much. I was distracted there.

Thank you, gentlemen. If I may say so, I thought the opening statements were a little fluffy and short on specifics. Let's hear what the members of Parliament have to say.

Mr. Epp.

Mr. Mac Harb (Ottawa Centre, Lib.): What do you mean? That was was excellent. You weren't listening.

The Chairman: I was listening and I was reading. I was looking for some real specific answers to the questions raised by the Auditor General.

Mr. Mac Harb: They answered every one of them.

The Chairman: I didn't find them, but I'm sure Mr. Epp's questions will draw that out.

Mr. Ken Epp (Elk Island, Ref.): Thank you, Mr. Chairman, and thank you all for appearing before the committee today.

First I would like to ask the Auditor General some questions, and I'd like to start with a general question. I'd like to ask you, sir, whether you believe you have enough authority to actually enforce the findings you make.

I think back, and for example, over the last couple of years you have brought in qualified approvals on the annual statements of the government's financial affairs; they've been qualified. You've given some specific recommendations. In most instances, the finance minister and the Department of Finance have just basically ignored you from one year to the next. Then eventually—this year, I believe—you gave an unqualified approval in your audit.

What do you see as a way of bringing accountability to the Canadian people and strengthening your role without eroding the so-called supremacy of Parliament?

Mr. Denis Desautels: Mr. Chairman, I'll try to answer that, but as Mr. Epp said, this is a fairly general question.

As Auditor General I do not have the authority to enforce any of the findings or recommendations I come up with. The tools that are given to me are reporting tools to Parliament. Hopefully, we can make jointly a good enough case for the things we bring up that it will attract the attention of Parliament and the support of members of Parliament when that is needed. In some cases, I can tell you, we are able to achieve certain answers or satisfactory reactions to our recommendations even before the issue is put in front of members of Parliament.

My authority is simply one of being able to report. I have the ability to search as much as I want in government departments and obtain all the information I need, and I think that helps me present a picture to members of Parliament that should be convincing.

In terms of being able to do the job you expect of the Auditor General, it's always important to have sufficient independence to do that job, but I'm not looking for the kinds of powers you may have referred to of being able to force people to do what I suggest, because that would have me cross over the line from the legislative to the executive.

Mr. Ken Epp: I'll just ask for a very short response. If I were to ask you whether you wanted to have any more authority than you presently have, would your answer be yes or no?

Mr. Denis Desautels: In terms of authority to force people to implement recommendations, the answer would be no. I'm satisfied with the general framework of my mandate. There are a number of other individual things I would like to have in due course, but the answer to your basic question would be no.

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Mr. Ken Epp: Before I leave you to go to some of the others, I have a question with respect to audits.

I know you look at the big picture. If I read your information correctly, you're bringing to our attention as parliamentarians that there are two major flaws in how government departments generally work. One is a lack of a clear definition of what the requirements are. We're talking now about grants and these types of things. What are the actual requirements to be met in order to be eligible for that funding?

As I see it, the second part is a lack of actual accountability that the money achieved what it was supposed to have been able to do. How is it possible to fix that in an organization with the magnitude of the Canadian government? This was brought to us dramatically and graphically by the fact that in just one department, it took 10,000 pages to list one part of their funding process. How can we ever have accountability when we have a problem of that magnitude?

Mr. Denis Desautels: Mr. Chairman, I believe accountability is possible in just about every government program. In some programs it's more difficult than others because of the nature of what a government department might do, but certainly if you're referring to programs of grants and contributions, I think it is possible to administer such programs in compliance with some basic rules and some basic principles. There are examples of that being accomplished around the federal government, so I think it's possible to do that.

Although it's not often well done, I think it's also possible in those programs to obtain a better accountability for results. It's possible to determine if those programs are working and achieving the objectives for which they're being set up and for which the money's being spent. So I think it's possible and there are examples around government right now of this being done.

Mr. Ken Epp: I need to move along. I'd like to talk a little bit about the infrastructure works program and accountability in that program.

I think we multiply our accountability challenge in the area of these tripartite programs. When you have three levels of government involved, you end up with the ability to pass the buck in terms of accountability. I just wonder how thorough, in your infrastructure programs... I suppose I could ask this question of Mr. Fadden or the Auditor General. When you have a community, a municipality, deciding whether to put in a requisition or an application for funding under this program—and we anticipate there will be another one—

The Chairman: It's almost time, Ken.

Mr. Ken Epp: I still have three minutes, according to my watch.

The Chairman: You have one.

Mr. Ken Epp: Okay. Let me just quickly finish, then.

You have one taxpayer down here putting money to three levels of government. Then you have these three levels of government all funding one program. Do we expect each one of those levels of government to have a full auditing machinery in place to account for this at all three levels? Is that not wasteful? Would there be a better way of accommodating that?

Mr. Richard Fadden: We would argue that it would not be effective and efficient to have three levels of audit, three separate systems of evaluation. In fact, the program we have administered takes into account the fact that Parliament has set up a system of audit for the federal government, the legislatures of the provinces have set up a series of accountabilities and audit for the provinces, and so have the municipalities.

Parliament set out a series of particular responsibilities for the minister for infrastructure and for the implementing ministers. Mr. Desautels comments on some of these in the context of his report.

Two provincial auditors have reviewed the provincial component of this program in the provinces and they've done the same thing. A variety of municipalities have also done audits. I guess I would be remiss if I didn't point out that all of this auditing activity has not pointed out one instance of financial mismanagement.

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We've tried to the greatest extent possible to minimize overlap and duplication by ensuring that each order of government does what it is most qualified to do. We don't think Ottawa, for example, is best qualified to tell Rimouski whether it needs a new sewer or whether it needs a new fire hall. It's the same thing in Manitoba or any other province. That's just one small example. We believe specialization in these programs is the best path to follow.

Mr. Ken Epp: Mr. Chairman, I regret that my time is up.

The Chairman: Thank you, Mr. Epp.

Mr. Desautels.

Mr. Denis Desautels: If I may, I have a quick follow-up on the question of Mr. Epp.

We're not advocating either that there should be audits at all three levels and any duplication of effort. We just feel it has to happen at one level or another and it has to be clear who's going to do what and who's relying on whom for what. I wouldn't want to leave the impression that we're arguing for a multiplicity of audit regimes.

Mr. Ken Epp: I need to ask you one quick question. Are you satisfied that all of the provinces—

The Chairman: We'll come back, Mr. Epp.

By the way, the bells are going. The motion is that the House now adjourn. It's a 30-minute bell, so we'll continue on for a few more minutes before we suspend the meeting. Then I think we'll come back, and if there is agreement, we may extend the meeting beyond the normal adjournment time of 5:30.

[Translation]

Mr. Sauvageau, you have eight minutes.

Mr. Benoît Sauvageau: I could ask a question for you, Mr. Epp, but you know that I have too much respect for you. I can say facetiously that, in order to solve your problem, we would have to eliminate municipal governments, provincial governments and the Liberals, and put the Reform Party in office. Then there would be no more audit problems. But I think that is not a suitable answer. is it?

Let us be serious. Mr. Desautels, can I ask you if you are somewhat, quite or extremely satisfied with Mr. Heintzman's response on accountability? Given the recommendations in your report, does Mr. Heintzman's response increase accountability, satisfy Parliament, parliamentarians and the public, or is it too vague?

Mr. Denis Desautels: Mr. Chairman, from what I have understood of Mr. Heintzman's response to chapter 23 on partnership governance, the Treasury Board Secretariat took our findings seriously and undertook in particular to update its guidelines and establish a framework, as we suggested. I therefore support the Treasury Board Secretariat's intentions. What remains to be seen is the result of these efforts, which I am looking forward to in the coming months. So the proof of the pudding is in the eating, and we will see.

Mr. Benoît Sauvageau: It is being said that departments and agencies need to implement the FIS, the Financial Information Strategy, to facilitate public access to the accounts and programs, and improve accountability in general. Are you concerned—and I think this comes back to what Ms. Jennings was saying—when you see that the officials are showing little interest?

On another point, in the organizations that are being created, and the report indicates that there are 77 new governance arrangements and that accountability mechanisms should be implemented very soon—maybe we will see that some day. Does it bother you that in the departments, agencies, governance arrangements and other entities, people are concerned only about justifying the requests for new directives, when there is never really any accountability, from a practical point of view? Does that concern you at all?

Mr. Denis Desautels: I am very concerned about accountability, and that is why we wrote chapter 23, in particular. We believe that there is a risk that accountability will be eroded as these types of partnerships proliferate. I am not saying, however, that these partnerships are bad; I think that if they are done properly, accountability can be enhanced in the end.

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So yes, accountability is an important concern to us. That is why we think that a framework should be established to set the parameters for new arrangements that will be developed in the months and years to come and possibly, when there is an opportunity, as it says in the chapter, some of the arrangements already in place can be improved.

On the one hand, then, I would like the framework to be updated and the guidelines made more clear, which would amount to revamping the arrangements already in place, and on the other hand, I would like to see a good discussion using those guidelines when new arrangements are proposed.

Mr. Benoît Sauvageau: All right.

I will now turn to Mr. Heintzman, if I may. Good afternoon, Mr. Heintzman. In Mr. Desautels' presentation, he states in paragraph 10:

The Canadian Adaptation and Rural Development Fund, the subject of Chapter 24, is another delegated arrangement. For the most part, we found that Agriculture and Agrifood Canada had developed controls for this arrangement that provide for appropriate accountability.

In your opinion, is this a good example of what should be applied to the 76 other arrangements that have been created? Can it be applied that way or is it on a case-by-case basis? That is my first question.

My second question is on the FIS. I do not know if there is any link, but in any case I make one. Implementation is scheduled to be completed by April 2001. The deadline may be met or not, but it exists. Would it not have been a good idea to provide a timetable for your response?

So I would ask you, in response to my first question, to give me a concrete example that could be applicable and, to my second question, by explaining whether or not a timetable would be useful.

Mr. Ralph Heintzman: Regarding the example given by the Auditor General, without going into details, I believe, as he said, that it is an example that could be used in other cases. I referred earlier to the database on best practises that we want to develop in the secretariat. That is a type of best practice that we would like to include, cite and promote in this tool designed for use by the departments and agencies.

As for the timetable, were you talking about the timetable for updating the framework?

Mr. Benoît Sauvageau: The FIS has a timetable, with a deadline of April 2001, for all departments and agencies. To launch new accountability programs or ensure better monitoring, would it not be a good idea to apply a timetable and ask the 76 organizations to implement them for, let us say, January 1st, 2002? There could also be a follow-up committee. Would it not be a good idea to have a timetable?

Mr. Ralph Heintzman: The framework should be updated by the end of the upcoming fiscal year. So we hope to have a proposal to submit to government by spring.

The timetable for implementing or updating the various arrangements will be decided by the government. We have to take advantage of any opportunities that arise, as was suggested by the Auditor General, in order to improve the existing arrangements. When the time comes to update legislation already passed by Parliament, parliamentarians and the ministers will want to use such a framework and the Auditor General's comments to review the arrangements that exist.

Mr. Benoît Sauvageau: Thank you very much.

The Chairman: Thank you, Mr. Sauvageau.

[English]

Mr. Harb, we will have about seven minutes from you, and then we will suspend the meeting.

Mr. Mac Harb: I'll probably take only four and my colleague will take four. I only have a small statement and a question to the Auditor General, with a response from Treasury Board. Those I hope will be brief, and I will try to be brief myself.

Because this is a joint program, that is, it is actually tripartite—federal, provincial, and municipal—I suppose we are dealing here with three levels of government, so we're not dealing with a third sector such as the private sector.

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I came to the conclusion that there are absolute philosophical differences here between what you, Mr. Desautels, have formulated in your mind, that this program is pure and simple, that it can't be measured, therefore, I have negative views of it... Did I sort of smell that somewhere? I don't know.

At the end of your presentation, you talked about how this program was essentially running on trust, with little confirmation that performance conditions were being met. So it's your gut feeling, basically, that tells you that probably this program did not meet its objective. On the other hand, Treasury Board is telling us that over 100,000 jobs have been created as a result of those programs, and many of the provinces and municipalities have said some wonderful stuff about this program.

I know you did an audit with the Province of Nova Scotia, I think. Was it with the auditor of Nova Scotia?

A voice: It was Vancouver.

Mr. Mac Harb: And Saskatchewan... Was it both of them? I wanted your views in terms of their responses to that audit. Did they share your views on that?

I also wanted to hear from the Treasury Board about what their views would be on what things out of what the Auditor General said could be implemented in future infrastructure programs.

Mr. Denis Desautels: Mr. Chairman, I'm glad to be able to answer those questions, because there may be a philosophical difference between ourselves and government representatives on how to run joint programs, even tripartite programs, and what the federal government is to do when they're in a partnership arrangement with a province or municipality.

We believe that the federal government still has to do a certain number of things. It cannot run totally on trust. I think it has to carry out certain of the things that government itself, in some cases, has clearly said it was going to do.

We gave an example in my opening statement of the highways program, where there were structured agreements between the federal government and the provincial government saying what each government was going to do, but the feds actually didn't do what the agreement called for and relied totally on the province. So even though there was a structured agreement calling for each party to do certain things, it wasn't actually carried out that way. The officials in question argue, well, there's no point in doing that, we trust our provincial colleagues, and that's enough.

We do have, to that extent, a certain philosophical difference when it comes to that kind of program, and I think it would be healthy to argue it out.

Back to the more specific issue of the infrastructure program, I realize full well that this is quite a popular program. Everybody seems to love this program. The municipalities are among those who love it most. It is a popular program and it generally ran quite well in terms of the mechanics and getting the projects carried out and approved without too many big difficulties.

But on the other hand, that doesn't mean it's perfect. Being a popular program doesn't mean that you've really achieved all of the objectives for which the money has been authorized by Parliament.

For example, we note in the chapter that there are certain shortcomings in terms of meeting the job creation targets, so there are some differences of view as to whether or not these were achieved, and in terms of whether or not there was substitution in the spending. I think the intent of the program is that it be new spending, but our work shows that there is some likelihood of substitution of provincial spending by the federal contribution.

We know there are other things as well, like the federal government approving a number of the projects—most of the projects—without really looking at much, if any, documentation, at least from what we could see in the file.

It's a popular program and there weren't too many evident glitches in the program, but did it achieve all of the objectives that it was meant to achieve? That's not as clear. It might be possible to gain greater assurance in the future, with such programs, that you would achieve the objectives you set out to achieve.

• 1635

The Chairman: We still have twelve minutes before the vote.

Mr. Mac Harb: I don't have any further questions.

The Chairman: Do you want to take a couple of minutes, Ms. Jennings? Then we'll suspend the meeting and go to vote.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you, Mr. Chair. I'll try to be brief in my question. Hopefully the answers will be brief as well.

[Translation]

My first question is for the Auditor General and it deals with something that we have heard a great deal about, which is that there is another infrastructure program in the cards. Do you think that the guidelines for renewing the strategic framework for alternative service delivery, established by Treasury Board, will correct the deficiencies that you found in the other infrastructure program?

Second, do you believe that the Financial Information Management Program, if it is properly implemented and used to its full capacity, will provide tools to enable both parliamentarians and officials to assess whether, in fact, the government should use an alternative service delivery mode for a service or product in a given circumstance rather than providing that service or product itself?

Mr. Fadden, I will ask you the same two questions.

Thank you.

[English]

The Chairman: We'll ask for the responses to be reasonably brief if you can, please.

Ms. Marlene Jennings: I didn't ask why.

[Translation]

Mr. Denis Desautels: I will try to be very brief, Mr. Chairman.

First, will the framework that we were talking about correct the deficiencies in the infrastructure program? It can correct some of the deficiencies, but there are problems that are more specific to the infrastructure program and that we raised, which will not necessarily be covered by the framework. So, to answer your question, the framework will correct only some of the deficiencies.

Second, will the Financial Information Strategy provide the tools needed to help make good decisions in the future with respect to the delivery mechanism or the decisions to be made in such a context? I think so. It will help a lot and in many ways, I believe. The more we move into the development of joint programs, the more necessary it is for everyone to have an adequate information base. The federal government therefore needs to develop adequate information tools in order to have all the information at its disposal to be able to report on program results and be accountable to its partners.

So I think that the Financial Information Strategy can be a very important tool.

[English]

The Chairman: Briefly, Mr. Fadden.

Mr. Richard Fadden: While we have to admit that no program is perfect, including this one, we do not agree with the underlying premise that there are a great many shortcomings in this program. With our provincial and territorial partners, and taking into account the views of this committee and the Auditor General, we'll try to formulate changes to the program. But we believe the arrangements that were used earlier resulted in the Canadian public getting good value for its money, without any financial mismanagement.

In terms of the financial information systems, we believe the potential size of the new program is such that it would warrant a special financial information system that would provide the same database to provinces, municipalities, and the federal government. We hope to be able to meet some of the requirements for the baseline information of which the Auditor General speaks.

Ms. Marlene Jennings: I just want to make a point.

I did not hear anything that was based on the premise that the programs, including the infrastructure program, were not good—not from myself nor the Auditor General. The point was made that there were some problems. I think Treasury Board agreed there were some problems, but not that the premise of the program was a bad one or that most of the objectives were not achieved. So I just want that to be clear, because I like the program.

• 1640

The Chairman: We will suspend the meeting and ask everybody to return as quickly as possible after the vote.

Thank you.

• 1641

• 1728

The Chairman: Ladies and gentlemen, we are resuming the meeting after it was suspended. Due to lack of quorum, the meeting will be adjourned to the call of the chair. Hopefully we can bring this subject back on the agenda at another date.

Mr. Epp.

Mr. Ken Epp: On a point of order, Mr. Chairman, since I don't always attend this particular group, do you have in your standing orders for this committee a provision to hear witnesses with only the chairman present, as we have in other committees?

The Chairman: No. We require five members. That also includes members from the government in order—

Mr. Ken Epp: Even just to hear witnesses?

The Chairman: Yes.

Mr. Ken Epp: Okay, so this committee's different. I regret that.

My apologies to the witnesses who have come here. I really think we should have been here to listen to you. I guess you can see who's absent.

The Chairman: The meeting stands adjourned.