PACC Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Thursday, November 21, 2002

¹

1540

The Chair (Mr. John Williams (St. Albert, Canadian Alliance))

Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General)

¹

1545

The Chair

Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance)

Ms. Sheila Fraser

¹

1550

Mr. Richard Flageole (Assistant Auditor General, Office of the Auditor General of Canada)

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Richard Flageole

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

¹

1555

Mr. Hugh McRoberts (Assistant Auditor General, Office of the Auditor General of Canada)

The Chair

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ)

Ms. Sheila Fraser

Ms. Maria Barrados (Assistant Auditor General, Office of the Auditor General )

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

º

1600

Ms. Sheila Fraser

Mr. Odina Desrochers

The Chair

Mr. Alex Shepherd (Durham, Lib.)

Ms. Sheila Fraser

Mr. Alex Shepherd

The Chair

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

º

1605

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Maria Barrados

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Ms. Maria Barrados

Mr. Alex Shepherd

º

1610

Ms. Maria Barrados

The Chair

Mr. Gerald Keddy (South Shore, PC)

Ms. Sheila Fraser

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

Mr. Mac Harb (Ottawa Centre, Lib.)

The Chair

Mr. Gerald Keddy

Ms. Sheila Fraser

º

1615

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

Mr. Alex Shepherd

The Chair

Mr. Gerald Keddy

Ms. Sheila Fraser

The Chair

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance)

º

1620

Ms. Sheila Fraser

Mr. Richard Flageole

Mr. Paul Forseth

Ms. Sheila Fraser

Mr. Paul Forseth

The Chair

Mr. John Finlay (Oxford, Lib.)

º

1625

Ms. Sheila Fraser

Mr. John Finlay

The Chair

Mr. John Finlay

Ms. Sheila Fraser

Mr. John Finlay

Ms. Sheila Fraser

The Chair

º

1630

Mr. Mac Harb

Ms. Sheila Fraser

Ms. Maria Barrados

Mr. Mac Harb

The Chair

Mr. Gerald Keddy

Ms. Sheila Fraser

º

1635

Mr. Gerald Keddy

Ms. Sheila Fraser

The Chair

Mr. Gerald Keddy

The Chair

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

º

1640

Mr. Philip Mayfield

Ms. Sheila Fraser

The Chair

Mr. Paul Forseth

Ms. Sheila Fraser

Mr. Paul Forseth

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

º

1645

Ms. Sheila Fraser

The Chair

Mr. Mac Harb

The Chair

Mr. Mac Harb

The Chair

Mr. Mac Harb

The Chair

Mr. Mac Harb

The Chair

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

The Chair

º

1650

Mr. Philip Mayfield

The Chair

Mr. Philip Mayfield

The Chair

Mr. Philip Mayfield

The Chair

The Chair

Mr. Odina Desrochers

The Chair

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

The Chair

Mr. John Finlay

Mr. Gerald Keddy

The Chair

º

1655

Mr. Odina Desrochers

The Chair

Mr. Mac Harb

Mr. Gerald Keddy

The Chair

Mr. Odina Desrochers

The Chair

»

1700

Mr. Gerald Keddy

The Chair

Mr. Gerald Keddy

The Chair

Mr. Paul Forseth

The Chair

Mr. Alex Shepherd

The Chair

Mr. Alex Shepherd

The Chair

Mr. Mac Harb

»

1705

The Chair

Mr. Odina Desrochers

The Chair

Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance)

The Chair

Ms. Val Meredith

The Chair

Mr. Mac Harb

The Chair

»

1710

Mr. Gerald Keddy

The Chair

Mr. Philip Mayfield

The Chair

Mr. Gerald Keddy

The Chair

Mr. Philip Mayfield

The Chair

Mr. Philip Mayfield

The Chair

Mr. Philip Mayfield

The Chair

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CANADA

Standing Committee on Public Accounts

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NUMBER 003

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Thursday, November 21, 2002

[Recorded by Electronic Apparatus]

¹  (1540)  

[English]

    The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Good afternoon, ladies and gentlemen.

    The orders today are pursuant to Standing Order 108(3)(e), consideration of the October 2002 status report of the Auditor General of Canada to the House of Commons.

    The witnesses today are from the Office of the Auditor General: Ms. Sheila Fraser, the Auditor General of Canada; Ms. Maria Barrados, Assistant Auditor General; Mr. Richard Flageole, Assistant Auditor General; and Mr. Hugh McRoberts, Assistant Auditor General.

    No later than five o'clock we will interrupt the proceedings and talk about the adoption of the first report of the subcommittee on agenda and procedure.

    So without further ado, we will now turn it over to the Auditor General for her report, please.

    Ms. Sheila Fraser (Auditor General of Canada, Office of the Auditor General): Thank you, Mr. Chair.

    I am very pleased to be here today to give you an overview of my first status report.

    As you mentioned, I am accompanied today by three assistant auditors general, who are responsible for these follow-up audits: Maria Barrados, Hugh McRoberts, and Richard Flageole.

    Following up on previous audits has been part of the regular work of our office for many years. Past annual reports have included a section on follow-up work, along with chapters devoted to new audit work. This year I decided to introduce a new report devoted exclusively to reviewing how the government has responded to our previous recommendations. I intend to present one every year, with the next one planned for this coming spring--that is the spring of 2003. The status report will become one of the four reports I provide annually to the House.

    Why a new status report on follow-up work? Well, not only does the new status report present the results of our follow-up work in a new format, it also reflects a new approach to the way we carry out that work. Over the years members of Parliament, and in particular members of this committee, have let us know that they want a more thorough follow-up of how well departments are doing in implementing our recommendations.

    What distinguishes the status report from our previous work is the way we select the issues to follow up, the scope and depth of our review, and the assurance our findings provide. We focus on a few complex and significant issues that are timely and relevant. These are the high-risk, high-cost issues that are likely to be of most interest to parliamentarians. Each of these issues is examined in more depth. They are in fact re-audited and new issues may be reported.

[Translation]

    This innovation in reporting our follow-up work is an important new step in the accountability process. I believe that it will go a long way towards more effective evaluation of the progress made by departments. I look forward to hearing your comments and suggestions regarding this new follow-up approach.

    What were our key findings? Our follow-up audits looked at areas where there were problems in the past, some of which require significant time and resources to resolve. By their very nature, audit recommendations are intended to correct problems. So, we might expect to come up with findings that are less than satisfactory. That is indeed what happened.

    I see this report as a wake-up call for departments. They agreed with our initial recommendations and recognize what needs to be done. Some improvements have been made; but overall, the pace is too slow and the results often fall short.

    One issue we looked at again is the integrity of the social insurance number (SIN). I am still concerned that the department has not done enough to safeguard and strengthen the integrity of the SIN. The government has reaffirmed its policy that the SIN was only an account number for authorized federal programs. The SIN continues however to be used for various purposes in the private and public sectors.

    Human Resources Development Canada has made little progress since 1998 in the way it issues SINs, both regular ones and the 900-series numbers that are only issued to people who are not Canadians or permanent residents. Although more people with 900-series SINs are expected to be in Canada temporarily, these SINs have no expiry date.

    In our view, the policies and practices of the Department do not meet the intent of the Employment Insurance Act and Regulations because it is not doing enough to identify SIN applicants properly.

    Finally, if the integrity of the social insurance number is jeopardized, how can we be sure that federal benefits go to the right people?

[English]

    In this report we looked at two critical areas of health care in which Health Canada plays a key role. The first chapter deals with national health surveillance and the second one refers to federal support of health care delivery.

    Chapter 2 deals with national health surveillance. Good national health surveillance is critical to making fact-based decisions on public health issues. In this follow-up we looked at the gaps and weaknesses in the way Health Canada tracks disease.

    Since our audit in 1999, Health Canada has made progress in establishing a national framework that allows for greater collaboration among the partners involved in health surveillance. However, for the most part, it still has no agreement with other partners on important matters such as data sharing, common standards, and nationally reportable disease. Many of the surveillance systems still lack timely, accurate, and complete disease information. Health Canada should be taking the lead on efforts to improve national health surveillance. The system will improve only through the joint efforts of the department, the provinces, and the territories.

    Chapter 3 deals with federal support of health care delivery. The federal contribution to the provinces and territories for health care is made through the Canada health and social transfer. Weaknesses in the information that Health Canada collects and reports annually to Parliament on the administration and operation of the Canada Health Act remain a long-standing problem. Health Canada has made only limited progress in addressing these gaps in information, which we identified in our 1999 audit.

    The first issue is the federal contribution to health care spending. Because of the nature of the funding mechanism, that is, a block transfer, Canadians do not know how much federal money is going to health care. The federal government should provide sufficient information to allow for an informed debate on the future of health care funding.

    The second issue concerns information Health Canada needs to identify non-compliance with the Canada Health Act. As a result, it is unable to tell Parliament to what extent health care delivery in each province and territory complies with the act's criteria and conditions.

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[Translation]

    In Chapter 4, we report on the management of the NATO Flying Training Program. The Canadian Forces came up with an innovative plan to train the new pilots they need to help solve a critical shortage.

    To date, this program has not been able to train enough pilots, and we are paying for services we are not receiving. National Defence entered into a $2.8 billion contract to train pilots over 20 years as part of the NATO Flying Training in Canada program.

    During the first two years of program implementation, National Defence used only about 41 per cent of the training capacity that it paid for. We estimated that as of the end of December 2001, the Department has paid about $65 million more than the value of training received. National Defence will have to manage this program carefully to ensure that at the end of the day, it receives full value for what it has paid for.

    In the future, contracts of this nature should ensure that payments are tied to performance and value received.

[English]

    Finally, we looked again at the management of Industry Canada's small business financing program. In 1997 we had questioned whether the objective of cost-recovery for the Canada small business financing program could be met given the fee structure and the loss-sharing ratio then in effect. While many improvements have been made in the program, we note that the program's losses will reach at least $200 million for loans made between 1995 and 1999, and it will be very difficult to recover the costs of loans made after 1999. There has also been a significant decrease in the number of loans made since 1998. The department will have to follow the program's financial information closely and inform Parliament of the results at the appropriate time.

[Translation]

    That completes my overview of the Report. I hope that devoting one report a year to following up on our previous recommendations will motivate departments to act. We welcome your comments on this new report and we will be pleased to answer any questions.

    Thank you, Mr. Chairman.

[English]

    The Chair: Thank you very much indeed, Ms. Fraser.

    Now we'll turn it over to questions. Mr. Mayfield, please, for eight minutes.

    Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance): Thank you very much, Mr. Chairman.

    To begin with, Ms. Fraser, I'd like to compliment you and your staff on preparing this status report. I think the comments you make are to the point. They keep the committee up to date on what your thinking is in terms of priorities. I look forward not only to studying this one more carefully, but to your next report as well. So you have my blessing, if that means anything.

    I'd like to start at the tail end of your report and work in reverse, because that's the way my memory works. Considering your comments on Industry Canada in paragraph 36 of your report, I'd like to ask why it will be more difficult to recover the cost of loans made after 1999 than before that. Do you have a rationale for that?

    Ms. Sheila Fraser: Mr. Chair, I'd like to thank Mr. Mayfield for his comments, and I do appreciate his blessing.

    As to the small business loans, I don't believe--and I'll ask my colleague Mr. Flageole to give us more information--that we meant it would be more difficult. We expected that the department would not be able to reach a break-even position on loans made after 1999. The data are available for the loans before that. There are little data to know if there has been a loss incurred after 1999. We were just trying to say that we would expect the same trend to continue into the future.

    I'll ask Mr. Flageole if he would like to elaborate on that issue.

¹  (1550)  

    Mr. Richard Flageole (Assistant Auditor General, Office of the Auditor General of Canada): Mr. Chairman, we did a very detailed analysis of the losses that will occur for those between 1995 and 1999, because we had a lot of information on it. The best estimate is that the department will lose about $200 million on those.

    For those after 1999, we did an analysis of the risk factors in the portfolio compared to the previous experience, and it showed that overall the level of risk is increasing. Given the present structure for the fees and the ratios, it's very unlikely that the situation is going to improve. There's no indication at all, based on the experience from 1999 to 2002, that the rate of losses will be reduced.

    Mr. Philip Mayfield: Could the reason for that greater risk be the lack of adequate management at the community level? I presume that many of the small business loans go out through, say, the community futures program. Is that correct?

    Ms. Sheila Fraser: I'll ask Mr. Flageole to comment.

    Mr. Richard Flageole: All small businesses are eligible. There are guidelines. We're talking about revenues below $5 million. It's any type of enterprise except religious, farming, and not-for-profit organizations.

    Mr. Philip Mayfield: My question is, is this lack of ability to recover the loans the result of a lack of administration at the local level or where these loans are made? Do you have any insight into that?

    Ms. Sheila Fraser: I'd just like to add--and perhaps Mr. Flageole can continue--that these loans are made through the chartered banks. There is, if you will, a kind of guarantee program. The banks administer the loans, and when there is a default or an inability to pay, a claim is made to the government.

    Mr. Philip Mayfield: I'm on track now. I was part of the industry committee when we worked to have these small loans implemented, and I'm sorry to hear about that. Do you have any recommendations about how these loans might be set up so that they could be more readily recovered?

    Ms. Sheila Fraser: What we have basically talked about in this report is that this program needs to be managed more actively. There needs to be better management. There needs to be more analysis done of the types of sectors that are using it. One of the issues concerning us is the decrease in the program. There's a premium being charged. It is obviously not enough to cover the losses. One of the program objectives is that it break even, and we question whether that's possible given the additional rate that's being charged and the kinds of businesses that are being financed. So we really think the department has to go back and take a hard look at the reasons for the decline and do a better analysis and try to understand what is happening with that loan portfolio. We think it's too much of a reactive management right now, rather than being more proactive.

    Mr. Philip Mayfield: There are a number of other questions on this that I'd like to ask, but I'm afraid I won't get to ask about something else, so I'm going to move on. I'd like to look at National Defence's NATO flying training. That was set up with a corporation that is being paid to train pilots. Is that not correct?

    Ms. Sheila Fraser: It is. There was a corporation set up. It was almost like a joint venture, if you will, with the private sector organization. Payments are being made to it to provide equipment and capacity to National Defence.

    Mr. Philip Mayfield: Correct me if I'm mistaken, but I'm asking whether the reason more money is being spent than value received is there's not the demand to train pilots now. Is that part of the reason? Is this a reflection of difficulties within DND?

    Ms. Sheila Fraser: I'd say there are several issues resulting in this overpayment, or payment for goods and services we're not receiving. I'll ask my colleague Mr. McRoberts to elaborate on some of them. Some of them are difficulties in National Defence--to have the people there, for instance, to do the training, and the flow-through of these pilots that are being trained. There were difficulties with equipment availability. There were several other issues. Perhaps Hugh could elaborate on some of those.

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    Mr. Hugh McRoberts (Assistant Auditor General, Office of the Auditor General of Canada): Mr. Chairman, I think the Auditor General has covered it pretty much. The fundamental problems started, according to National Defence, with problems first getting the equipment. There were difficulties, because of American regulations, with getting the aircraft into Canada. There were then difficulties with the aircraft in terms of its serviceability and availability. These then exacerbated problems DND was having both in terms of ensuring a steady flow of pilots, as well as ensuring the necessary flow of instructors to the programs. These factors compounded each other in creating the problem.

    The Chair: Thank you very much, Mr. Mayfield.

    Monsieur Desrochers, vous avez, s'il vous plaît, huit minutes.

[Translation]

    Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you very much, Mr. Chairman.

    Madam Auditor General, we're delighted to welcome you to our committee today. First off, I want to congratulate you for focussing your attention on specific areas in which your predecessor had identified some shortcomings. Clearly, you have reaped the benefits of this initiative. I've never seen such media coverage of your efforts. Members have also contributed to the process in so far as the integrity of the SIN number is concerned.

    Mr. Desautels had already identified some serious shortcomings in 1998. We can see that as you table your report today in 2002, little progress has been made. Having brought these issues back into the forefront and pointed out certain inequities, have you had any feedback at all from Human Resources Development Canada? Have there been any new developments?

    You've made a considerable effort and the members of the Public Accounts committee are doing their job, but when it comes down to making decisions or when we expect a little more political will on the part of...If I were the Minister of Human Resources Development and if I had some news to impart...Have there been any announcements in the past month or six weeks?

    Ms. Sheila Fraser: Thank you, Mr. Chairman.

    As you know, the Minister announced a series of measures on the very same day our report was tabled. We were pleased to note that some measures were to be implemented immediately. I believe an action plan has been drawn up and a copy was sent to my office. I will ask my colleague to provide you with the specifics. We were informed of a number of measures to be implemented right way and of others that would be at a later day. Obviously, we did not validate these measures. However, let me assure the committee that we plan to check back in a few years to see if any improvements have in fact been made. Ms. Barrados may be able to comment further on that.

    Ms. Maria Barrados (Assistant Auditor General, Office of the Auditor General ): Thank you very much.

    I don't have a great deal to add. The chapter contains a response from the minister indicating the direction that the changes will take. There is a strongly expressed desire for change, but we have yet to see the specifics.

    Mr. Odina Desrochers: It's all well and good to want changes, but it's important to follow through with them.

    You mentioned an action plan. Do you see any indication at all from this plan that progress will be made on some fronts?

    Ms. Sheila Fraser: As Ms. Barrados mentioned, some of the measures were described in the response. Other measures were announced on the very same day the report was tabled. However, we have not done a follow up to see how far the department has come in implementing its action plan.

    Mr. Odina Desrochers: As you can well understand, the integrity of the SIN has taken on considerable importance, particular in light of the events in New York in September 2001. You stated that temporary SINs without any expiry date are issued. Doesn't this practice jeopardize all of the other government measures taken in an effort to clamp down on security in Canada?

º  (1600)  

    Ms. Sheila Fraser: I have to say that we did not look at security issues as such. Perhaps it would be a good idea for the committee to invite departmental representatives to review for the committee's benefit the department's past actions and future plans in this area.

    Mr. Odina Desrochers: Thank you, Mr. Chairman.

[English]

    The Chair: Merci beaucoup, Monsieur Desrochers.

    Mr. Shepherd, please, you have eight minutes.

    Mr. Alex Shepherd (Durham, Lib.): Thank you, and it's nice to see you again.

    I would like to talk about your observations about health care. You make the comment that Canadians don't know how much money they're spending, or how much the federal contribution is towards health care, and yet the politicians are bombarded by newspaper advertisements. In our newspapers, the provinces proclaim they know exactly how much money the federal government is spending on health care. I think the number is something like 14¢--this is what they often tell us. How is that consistent with your comments?

    Ms. Sheila Fraser: The provinces have somehow estimated what they believe the federal share of health care spending is, just as the Department of Finance has estimated what they believe the federal share is. There is on the Department of Finance website a calculation of how much federal funding they believe goes to support health care. But because of the nature of the transfer, which is a block transfer and includes post-secondary education, health, and welfare--and the provinces can allocate all or none of that money to health care--there is no way to know precisely how much federal money is targeted for health care.

    Mr. Alex Shepherd: Under the social union framework agreement we signed with the provinces, they were committed to do some reporting on this issue. As I understand it, there was a two-year window.

    Ms. Sheila Fraser: Yes.

    Mr. Alex Shepherd: It's now November 2003 and we're significantly removed from that reporting request.

    The Chair: It's still 2002.

    Mr. Alex Shepherd: Yes, it's 2002. But the original agreement was in September 2000, so by September 2002 that was a reporting requirement.

    Ms. Sheila Fraser: Yes, and in fact, Mr. Chair, there were reports issued by all of the provinces and the federal government--the health indicators report--and by the territories as well, which presented information on a certain number of agreed areas of indicators. It was, I think, a very innovative way of reporting. All of those reports were also verified by the legislative auditors, and it came out, I would say, probably September 29 or September 30. I think it would be an interesting example for this committee to look at in reporting on performance and on information. There's a long way to go in those reports, and I think most jurisdictions indicate that they are kind of initial and there's a lot of data that is still missing. But it is a very interesting way to report to Canadians on health issues.

    Mr. Alex Shepherd: But it didn't answer your question, and that is being able to trace the federal government's money flowing into the provincial--

    Ms. Sheila Fraser: That is correct. It was a report more on health outcomes and health statistics, but that's correct.

    Mr. Alex Shepherd: Have you studied SUFA, the social union framework agreement? My understanding at the time was that was exactly what they were to do with it. They were to give us an accounting for the money we had expended on health care.

    Ms. Sheila Fraser: No. I can ask Dr. Barrados to help me on this one.

    My understanding is that the reporting that was required under SUFA was not from the provinces to the federal government but was rather from the provinces to their own constituencies and their own people. The block transfer funding is a block and gives the flexibility to the provinces to allocate it as they will. This was slightly different. There were certain targeted transfers for health care such as health care equipment and things like that. There were certain ones that were targeted, but the general block fund is not a targeted....

º  (1605)  

    Mr. Alex Shepherd: I think our problem was we didn't specify the nature of the accounting.

    Ms. Sheila Fraser: But perhaps Dr. Barrados--

    Mr. Alex Shepherd: Anyway, I want to get off that subject.

    Ms. Maria Barrados: I have just a small point. SUFA was an agreement in principle. There was a specific set of agreements that came with the disbursement of over $21 billion, and that specified this reporting requirement against the agreed-to number of indicators. That was under the SUFA umbrella, but it followed SUFA.

    Mr. Alex Shepherd: With regard to social insurance numbers, there's a part of your report here that talks about dormant files. It seems as if HRDC removes them from the disaster of over five million missing numbers.

    But when I read through that, it doesn't tell me that is the case. It tells me that CCRA simply tracked them. They said these numbers are not being used in the sense that people haven't filed income tax or whatever the case may be. Isn't that the worst-case scenario? In other words, the worst-case scenario is somebody actually has a social insurance number and isn't filing a tax return.

    Ms. Sheila Fraser: You're right, I guess, but that would be the responsibility of CCRA to try to see that people are filing that should be filing.

    What happened here was that the department flagged social insurance numbers for which there had been no activity. But they only flagged them. They didn't cancel them. They didn't even put an alert in the system. I know some of our people, one of the auditors was telling me, actually happened to be there when a transaction came through and this code came up. They asked what it meant and they said, “Well, this hasn't been used in five years.” Our people asked, “What do you do about it?” The answer was “Nothing”. There was no additional procedure that was put in place to check if this was valid or not. Now I've noted the department has indicated they're going to be cancelling them if they haven't been used in five years or something.

    Mr. Alex Shepherd: I guess the point I'm trying to make is that 2.4 million numbers don't necessarily mean that people aren't out there with them. It just means they haven't shown up in the government system.

    Ms. Sheila Fraser: That is correct. There could be very valid numbers that people have not filed a tax return, for example, for five years. There are many people who are not required to file a tax return. So there could be many people who have valid numbers that have been dormant for a period of time.

    Mr. Alex Shepherd: I know your study doesn't really lead us anywhere...I really didn't mean to say that. But would you anticipate through demographic changes...? In other words, often people say, well, people die and they die with their social insurance numbers. But you've done this by age categories and so forth. What interpretation does HRDC give you for this five million overage? They seem to fall on all age groups. We can't just say people over the age of 60 or 70 or something.

    Ms. Sheila Fraser: I agree with you. We haven't really had a reason. I think there's an issue about controls in the system. Not all of the cards were subject to the same kinds of controls for issue, even way back. I mean, it was very easy to get a card and people could have had more than one card issued to them. It could be people who were here temporarily and have left. There could be a whole variety of reasons, and that's one of the issues I think the department has to deal with. They have to somehow improve the quality of this database.

    Perhaps Dr. Barrados would like to add a comment on that.

    Ms. Maria Barrados: The department suggests a number of reasons. They identify it as an issue with the 900 series, which are issued temporarily, but then they are never cancelled and somebody leaves the country.

    They also acknowledge that there are probably deaths. People have died, and they haven't been notified. They agree there are probably people with multiple cards, because of the ease in getting them, and potentially fraud. They also feel there could be a bit of an issue with comparing the census numbers with the cards and that there isn't an exact fit in time. There would be some variance in those numbers because of the two data sources.

    Mr. Alex Shepherd: Somewhere along the line it must be possible to do an approximation--in other words, take all the 900 cards out of here and all the people who are over the age of 90. Still you have a big problem.

º  (1610)  

    Ms. Maria Barrados: Yes, there is a problem. Our main point in this audit is that there have been longstanding issues of control weaknesses; there hasn't really been an effort to try to control the integrity of that process.

    The Chair: Thank you very much, Mr. Shepherd.

    Mr. Keddy, please.

    Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chairman.

    Thank you, Ms. Fraser, for attending here today, and your people with you.

    I have a couple of questions. The first one is more on the lines of a point of order, but I need the information for another time.

    I would like to ask you when you were asked to come to this committee. When did you know you would be appearing here today? I know that is kind of out of the blue, but it's important.

    Ms. Sheila Fraser: I'm not even really sure, Mr. Keddy.

    I'll have to tell you, quite honestly, I'll have to ask my staff when we knew. My calendar is controlled by people other than me.

    Mr. Gerald Keddy: I know the feeling. For that very reason it's important, if you could, to get back to us.

    Ms. Sheila Fraser: I will get back to you.

    Mr. Gerald Keddy: It is much appreciated, and I appreciate that you are busy.

    Ms. Sheila Fraser: I have every Tuesday and Thursday, I must admit, all fall booked for this committee, so when specific subjects are dealt with.... Anyway, I will get back to you on it.

    Mr. Gerald Keddy: My point is, I expect when you know and you get back to the clerk, or to the chair, that the rest of us on the committee--Liberal members, opposition members, all of us--should know at the same time. It's important.

    The Chair: Mr. Keddy--

    Mr. Gerald Keddy: Excuse me, Mr. Chair, but I do have the floor, and I am asking a question that's important.

    The Chair: I know it's important; just a second.

    Mr. Keddy asked a point, and the Auditor General said she would get back to him. He was asking when this was advised. It was announced at the public accounts meeting on Tuesday afternoon that there would be one here this afternoon, and in essence the 48 hours' notice was announced to the committee at that point in time. The written notice went out, I believe, yesterday.

    Mr. Gerald Keddy: Some members get them on the 19th and some members get them on the 20th. I would expect that we would be able to improve upon that system.

    Anyway, to the Auditor General, I do have a couple of questions.

    Mr. Mac Harb (Ottawa Centre, Lib.): I have a point of order.

    In fairness, it wasn't the fault of the Auditor General. She had nothing to do with that.

    Mr. Keddy: No, absolutely not.

    Mr. Mac Harb: I also went to the wrong room, so I have to blame myself, to tell you the truth.

    The Chair: Fine. The issue is closed.

    Mr. Keddy.

    Mr. Gerald Keddy: Thank you.

    I have a couple of questions on the whole issue concerning social insurance numbers and the extra cards that are in the system.

    I don't have the number at the top of my head, but it's four million or five million cards. That's a tremendous number of extra social insurance numbers to have out there. It seems to me, regardless of the fact that some of them would be duplicates sent out by accident, and we understand probably some of them are cards that have never been utilized, never been put into use, or have simply become dormant over a period of time, even given that, four million or five million cards, I would think, should concern the government enough that they would simply find a way to use the database they have in existence, contact the individuals, and issue new cards.

    I realize it's a difficult question for you, but I would think, because of the urgency of this issue, that issuing new cards wouldn't be an unforeseen reaction to this. I don't think the cost, given that the government is prepared to spend billions of dollars in other areas, would be exorbitant.

    Do you have thoughts on that, or an answer?

    Ms. Sheila Fraser: I think, Mr. Chair, there is one issue that would indicate why the government might view that somewhat differently. It's that the government has been very clear that the social insurance number is to be used as a file identifier. It is not to be used for many other uses for which it is currently being used. So if it is to be used only as a file identifier for, for instance, your income tax and perhaps some federal programs, there's probably less need to have a really tight and foolproof system.

    The difficulty I think comes in the fact that the social insurance number, I think we all will recognize, has been given uses much beyond the use of a file identifier. This was one of the issues we raised in the original audit, that the government had to give clarity to what this number was being used for, and they stated very clearly it is to be used as a file identifier.

    We think if that is the case there should be more information and more education in the public sector and in the private sector that this number should not be used for anything other than that.

º  (1615)  

    Mr. Gerald Keddy: Thank you.

    My next question is on the $7.5 billion in the foundations. I think this is certainly a huge concern, or should be, for most parliamentarians. Beyond the obvious issue that there's a lot of money that is sitting out there not being utilized--and I would guess that it's gathering interest, so it's actually doing some good--the basis for this, the legality of the situation, of a government whose own policy says that any surplus will be paid on the debt, I think is questionable. But even more important, the whole issue to you as Auditor General not being able to actually examine in front of you at close reach rather than at arm's reach the foundations themselves should be a huge concern. It's a concern to me as a parliamentarian, and I'm sure it's a concern to the taxpayers of Canada.

    Furthermore, some of these foundations are even set up--certainly the one for natural resources to reduce greenhouse gas emissions--so that the money in the foundation upon the day the foundation is wrapped--let's say there's $100 million there--simply goes out to any project that's still on the books.

    As Auditor General I'd like your opinion on that, and it's a far-reaching question.

    Ms. Sheila Fraser: I obviously have concerns and issues around the foundations and certain other arrangements. I think we have made many comments and we've published a fair bit of work on that. The most recent, and perhaps the most comprehensive, piece of work was in our April report, where we had a specific audit looking at all these kinds of arrangements. We've come back again in the public accounts of this year in our observations to raise the issue again.

    I don't know that we really want to get into all this today. I think it would need to be the subject of a hearing in and of itself to discuss the foundations.

    Mr. Gerald Keddy: I think that's a good idea.

    The Chair: If I may again interject, we had it in the agenda to have a hearing on that matter, but then of course with the scheduling this fall it hasn't taken place at this point in time.

    Mr. Gerald Keddy: Do I have time for another question?

    The Chair: One more.

    Mr. Gerald Keddy: The last area is on the EI account, and if we're looking at somewhere--

    Mr. Alex Shepherd: I thought the order of the day was to discuss the status report.

    The Chair: The order of the day is to discuss the status report, and I'm sure Mr. Keddy is discussing the status report of the Auditor General, so we'll see how he phrases the question.

    Mr. Gerald Keddy: My question would be on the surplus in the EI account. We are in a situation where we have somewhere around an extra $4 billion or $5 billion, a tremendous amount of money in the EI account that's coming out of the EI account and going into general revenue. So as Auditor General, when you look at the surplus of $8.9 billion last year, it's not a real surplus; it's a surplus because extra money came out of the account, more than was needed to service the EI account, so it's inflated by $4 billion to $5 billion.

    Ms. Sheila Fraser: I could get into a very long explanation, and I would have to get into a very long explanation, about what the EI account is and what it is not.

    Mr. Gerald Keddy: Give me the short answer.

    Ms. Sheila Fraser: The EI premiums go into the general revenue fund. They do not go into a separate account.

    Mr. Gerald Keddy: Absolutely. Understood.

    Ms. Sheila Fraser: The EI account is, if you will, a notional account. I presume the committee will be looking at the public accounts at some point in the future. This is one of the issues I raised in my opinion on the public accounts, and I would hope we would have a more fulsome discussion at that time.

    The Chair: You will likely have that more fulsome discussion next week. I think we're going to be talking about the public accounts, Mr. Keddy.

    Second round, four minutes. Mr. Forseth.

    Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance): Only four minutes. Okay.

    Thank you, Ms. Fraser, for being here. I want to address your report on the subject area of the management of the Canada small business financing program. You do say very clearly that:

    

While many improvements have been made in the program, we note that the Program's losses will reach at least $200 million for loans made between 1995 and 1999, and it will be very difficult to recover the costs of loans made after 1999. There has also been a significant decrease in the number of loans made since 1998.

    Looking at this program, it rolls from year to year, I take it, because it's a guarantee program. It's almost like statutory spending. That might be an appropriate topic for the new committee on government operations and estimates to fundamentally ask the question about why we are doing this over and over again. Is it useful? Is it the appropriate thing to do? Is it delivering the social objectives in the larger perspective, as it's intended to do, or is it just a straight drain on government and not really a good thing to be done?

    Perhaps you can address a little bit just what in the world is happening with this program, seeing that the number of loans being given is going down. And maybe you can talk a little bit about how that compares to regular experience or practice with a bank, and how might we look at this at the other committee to examine the fundamental questions of program accountability. Should we keep doing this over and over again?

º  (1620)  

    Ms. Sheila Fraser: I think Mr. Forseth has raised a really interesting and pertinent question. I would just say I would expect the department to do that kind of evaluation itself on the program.

    One of the issues we raised, if you look in the chapter, was that the loans have decreased significantly. In 1994-95 there were over $4 billion of loans guaranteed, and we're currently just somewhere over $1 billion.

    The department is unable to answer as to why the decline. We talked to some of the financial institutions. There were issues raised about the burden of administration in this program, but I think it would be worthwhile to have.... The department should be doing that kind of evaluation. Perhaps Mr. Flageole might want to add a few comments as well.

    Mr. Richard Flageole: We have raised the issue since 1997 that they have to define better what that program is aiming to achieve and they have to measure. We're in 2002. It hasn't been done yet. That program has not been the subject of a formal, rigorous evaluation since 1995. Given the amount of money involved and the future projections we're making, I think it would be very critical that such an assessment be made, and that's the call we made in that chapter.

    Mr. Paul Forseth: I might discuss it with my colleagues and make a formal request at the other committee that first of all the department produce a report, and then we could call evidence on that and follow it up in an orderly way.

    I'll just quickly flip over to the social insurance number issue. Have you noted whether there is any way, when numbers are being used, to check to see very easily if a number is being utilized, such as taxes are being withheld from earnings or EI premiums are being paid, and to cross-reference that, especially with the 900 series numbers I'm talking about, to see if there is a deportation warrant? Certainly it would be reasonable to those who are paying the bills--that's the taxpayer, the voter--that the system is not dumb and blind and that the utilization of a 900 series SIN number is according to the law. But if there is a deportation warrant for this person, and yet the system is saying this person, or somebody in the impression of that person, is still around Canada, maybe it would provide an avenue for us to follow up.

    I understand there are some 20,000 people, or whatever, floating around, and this would be a way of getting at that.

    Ms. Sheila Fraser: We didn't look at that issue per se in this chapter, and unfortunately I can't answer anything on it. Of course, I expect there would be privacy concerns in comparison of data, but I'm not an expert on that. I would just raise that issue for consideration.

    Mr. Paul Forseth: I just want to make the comment that the essence of the 900 number is that whole category, but the very legality of that person to be in that category or not is directly related to the existence of the number.

    The Chair: Mr. Finlay.

    Mr. John Finlay (Oxford, Lib.): Thank you, Mr. Chairman.

    I'd like to thank you for the report. It's very interesting.

    I think we really need to do something about point 29 here. The second issue concerns information.

...Health Canada needs to identify non-compliance with the Canada Health Act. As a result, it is unable to tell Parliament to what extent health care delivery in each province and territory complies with the Act's criteria and conditions.

    It seems to me that's something we should look at in more detail.

    The other thing I'm very interested in is:

The Canadian Forces came up with an innovative plan to train the new pilots they need to help solve a critical shortage. To date, this program has not been able to train enough pilots, and we are paying for services we are not receiving.

    Can you throw a little more light on that? When you say it's an innovative plan, I'm encouraged, but maybe it isn't good enough. When it says we are paying for services we are not receiving, is that because somebody doesn't bill them correctly, or is that because there's a guarantee in there for so many trainers, whether you have pilots to train or not? There must be some pretty sloppy administration.

º  (1625)  

    Ms. Sheila Fraser: The program was an innovative way for the government to get access to very expensive equipment and facilities, and basically pay for them over a 20-year contract. So it's a way of financing these very expensive planes and services--they might not have been able to have that amount of money up front--and work with the private sector to do it.

    We recognized in this report that there were sort of growing pains in this program and difficulties on the part of the department and on the part of the contractor. The equipment wasn't available, so people couldn't take the training. There were difficulties with the scheduling of people to go through that training, so the people weren't there, and they weren't flying the number of hours they should have. But the difficulty was that the contract was basically fixed price, so you had to pay for it whether you used those training spots or not.

    So there has to be better management of the contract. People have to get on to the contractor faster if there are difficulties. There has to be identification and resolution of the issues. When we went in, the department hadn't even costed out what hours hadn't been used and what time was available. We were just trying to say, “You have to manage this contract”. We have been told since then that they believe they can recover that amount during the rest of the contract, but only if they start to actually manage it.

    So hopefully there's a possibility they will be able to recover some of that. You should be telling Parliament what you're doing to get it back.

    Mr. John Finlay: Thank you.

    The Chair: Do you have one more quick question, Mr. Finlay, or is that it?

    Mr. John Finlay: There was one other little point. I know Mr. Forseth asked it and I guess I didn't catch the answer. In the Industry Canada program, you say the loss will reach $200 million for loans made between 1995 and 1999. I presume that means some of the loans, just like in regular commerce, didn't work out and therefore they didn't get their money back.

    You say it will be very difficult to recover the cost of loans made after 1999. Is that because business situations were not as good after 1999? What changed that would make that very difficult?

    Ms. Sheila Fraser: We're basically saying we have the data for loans made up to 1999, and there was a loss of $200 million. We expect that trend to continue. We don't think the program will break even afterwards.

    You're right that they are loans that have not been recovered. They basically go through the banks, and when the banks are unable to collect the loans--

    Mr. John Finlay: Collect it from us.

    Ms. Sheila Fraser: Collect it from the government, that's right.

    As Mr. Flageole explained earlier, if anything, the loans that are outstanding are riskier than they were previously. So everything would lead us to believe that the losses will continue in this program, and we're saying that somebody needs to look at that.

    The Chair: Thank you very much, Mr. Finlay.

    Mr. Harb, four minutes, please.

º  (1630)  

    Mr. Mac Harb: I also want to thank the Auditor General for her report.

    I have a couple of questions. One concerns point 23 dealing with national health surveillance. You indicate that there has been progress but that there has been no agreement with other partners. Looking at the response of the Department of Health, in their view things are moving along well and they are getting the cooperation they are asking for. I wonder if you could elaborate on the specific areas where they are not getting cooperation.

    The second question has to do with points 28 and 29 dealing with transfer payments. I totally agree with you that if we give money to the provinces for health, we should know how much we are giving them, and Canadians deserve to know as well how much the provinces are spending from that transfer payment. I'd like to know whether you think this mechanism we have to put in place to ensure compliance with the Canada Health Act should also apply to post-secondary education.

    Ms. Sheila Fraser: I'll start with the second question first. I agree that there should be a notional allocation of that block transfer to health, post-secondary education, and social programs. I know there's a lot of debate currently in the country about health, which has made people focus on that, but I think the other areas are probably of concern to Canadians as well. I would agree that the same principles should apply at least notionally. Obviously, a policy decision was made not to go to specified funding and to do a block transfer, but at least notionally the federal government should be indicating what its intentions are for each area.

    On the issue of health surveillance, I will ask Dr. Barrados to elaborate. The difficulty in all of this, of course, is that the federal government depends on the cooperation of others. They have made progress, as you say, but I think the specifics are lacking.

    I'll ask Dr. Barrados to give us the details.

    Ms. Maria Barrados: The interesting thing about this area is that, as the Auditor General said, you do rely on cooperation and partnership with the provinces. That is a collaborative relationship. In this instance a lot of work has been done on a framework, and we're saying that there has been good progress on actually getting this framework in place.

    In the meantime, the data requirements continue, and there hasn't been a lot of progress in actually improving the numbers. There are some particular surveillance systems where it's better, but they're a minority. There are some huge gaps. When you look at the commitments that were made by the department the last time we presented this audit to this committee, you'll see that they didn't meet those timelines. So this is a very good question for the department. There were a number of commitments that would suggest more rapid progress, and that's the basis for us saying that it's just not fast enough given the data needs that are there.

    Mr. Mac Harb: Thank you.

    I'm done.

    The Chair: Thank you very much, Mr. Harb.

    Mr. Keddy, do you have a question?

    Mr. Gerald Keddy: Yes.

    The Chair: You have four minutes.

    Mr. Gerald Keddy: Thank you.

    Going back to the foundations, the problem becomes the inability to track the dollars once they have been allocated. There must be a better system we can put in place. In your view, what would that system be in order to accurately track the number of dollars that go to a foundation, what those dollars are spent on, and what kind of interest those dollars are making if they're sitting in a bank account somewhere? That's money over and above what was originally designated for the foundation.

    Ms. Sheila Fraser: To date the foundations basically report financial statements and publish annual reports. These are put on their websites and are available to the public at large.

    What we are saying is, given the amount of public money involved, there should be more credible reporting to Parliament and government on what use has been made, going beyond simply the financial statements, and better or clearer indications of objectives—which are generally set out in the funding agreement—and better performance reporting, and accountability back to Parliament, which doesn't exist now in most cases. So there should be some kind of performance report, if you will, and an indication from these. The foundations could even be called before committees, for instance, to talk about what they're doing.

º  (1635)  

    Mr. Gerald Keddy: So accountability and some type of a rating system so we'll actually know the dollars are being spent wisely—even though it is rather high-risk, research-type projects being undertaken in a number of these foundations. We know there will be a fairly high percentage of low returns or projects that will simply fail. That's why government needs to support them.

    Ms. Sheila Fraser: The other recommendation we've made is that these foundations should be subject to a broad-based audit, like a kind of value-for-money audit. The Auditor General of Canada should be mandated to do these kinds of audits, which would look at efficiencies and whether they meet program objectives, and so on. This would also help Parliament to know what has happened in the foundations.

    The Chair: Thank you.

    Any more questions, Mr. Keddy?

    Mr. Gerald Keddy: No, sir.

    The Chair: Okay.

    Mr. Mayfield, please, for four minutes.

    Mr. Philip Mayfield: Thank you, Mr. Chairman.

    I'll make one little point and then I'll go back to health.

    In looking at the management of small business financing, when I was a member of the industry committee some time ago, the committee spent a good deal of time talking to the banks about making more money available to small business. There were two problems we wrestled with to some considerable extent. One was the banks' problem. They said it cost as much to administer a small loan as it did a large loan, and they really weren't that interested for that reason. The other problem was that if the government was going to guarantee these loans, the banks might not properly look after the loaner-loanee relationship, but just fall back too easily upon the guarantee.

    Are any of the dynamics of these former problems a part of what you're discussing in your report?

    Ms. Sheila Fraser: We do discuss the first issue briefly. We didn't go into a detailed discussion with the financial institutions to see their views on the programs. We talked to a few. As I mentioned before, one of the issues that concerned us was the decrease in the loan program. We were trying to get a sense of whether there were any obvious reasons for this.

    One issue raised by the financial institutions was the administrative burden of the loans. One could question if maybe they're not promoting these loans as much as one would like. But we would have expected a department to be able to have done this kind of work, to have been more proactive and done more analysis of the program, asking why there was a decrease, rather than just reacting to loan claims that came in. As we said, we really think there needs to be a good evaluation done to find out what is actually happening with this program. Is it still meeting the objectives that were set out initially?

    Mr. Philip Mayfield: Thank you.

    The second question I wish to raise with you relates to paragraph 21 in the Health Canada section. In the final sentence of the paragraph, you say, “In this follow-up, we looked at the gaps and weaknesses in the way Health Canada tracks disease.” I wonder if you would be able to discuss these gaps and weaknesses before the committee right now.

    Ms. Sheila Fraser: Yes, it was actually quite interesting. There were some good systems. I think we noted in the report, for instance, that a lot of progress had been made on a system for diabetes. But for most or many, many diseases, including most cancers—except for breast cancer—and cardiovascular disease, there is no system. Dr. Barrados could probably add some more. Many of the diseases that affect a large number of Canadians are not tracked. When you have these kinds of diseases affecting many people, one would expect that there would be tracking of them or surveillance, which could be used to help determine kinds of treatments and other information like this.

º  (1640)  

    Mr. Philip Mayfield: Would there be a sense perhaps that the government, or the department, is depending too much upon private or public companies to do the research, to do the tracking? It's pretty big business, if you listen to what's going on in the prescription business right now. Is the government involved in understanding what research is going on and what research is not going on, or is there a sense of being involved or really leaving it to someone else to do it?

    Ms. Sheila Fraser: No, these were really systems that would be developed almost from data from the doctors' offices and from the hospitals that are rolled up through the provinces, and then the federal government is trying to get a sense overall, nationally, of what is happening.

    They are difficult systems to put into place. As you mentioned earlier, you really do depend on the good will and the cooperation of the provinces to provide this information. I think this audit probably shows that where there is focus put on developing a system and a focused attention, the department can do it very well. It's probably a question of attention and resources, I would think, as to how many of these they can do.

    The Chair: Thank you, Mr. Mayfield.

    Mr. Forseth, please.

    Mr. Paul Forseth: Thank you.

    I want to discuss a little bit more the generic issue of the report itself.

    You said, and I quote you, “I intend to present one every year, with the next one planned for the spring of 2003. The Status Report will become one of the four reports I provide annually to the House.” Then you also say in paragraph 8, “Each of these issues is examined in more depth; they are in fact re-audited, and new issues may be reported.” This is the ongoing cycle where it flows from public accounts, historically looking back as to how things were done, to our new committee, which looks forward as to whether we should keep doing these things over and over again, and to accountability into the future. That's somewhat what this report is doing.

    I'm wondering if perhaps you could provide a list to this committee, and then the other committee can look at where we could, between the two committees, ask government to conduct some specific reports that would help the other committee get off the ground and start focusing in on some accountability issues, looking into the future, about value for dollar and whether we should be doing certain activities, and do that on an informed, rational basis, from study, rather than just letting things roll on and you keep coming back to committees saying we lost some more money.

    Ms. Sheila Fraser: I'd just ask, Chair, if Mr. Forseth could give me some clarity on the list he would like. Is it the list of the audits we're going to be presenting this next spring or is it--

    Mr. Paul Forseth: You may want to think about this a little bit and understand the relationship between the public accounts committee, which looks backward, and now the new Standing Committee on Government Operations and Estimates, which is supposed to look forward. It has authority to look at crown corporations, statutory spending, and a whole bunch of other things that maybe, normally, the public accounts committee wouldn't deal with. You may want to go away and think about it and help us, because you're already immersed in this whole game that would help us to get our work schedule going.

    Ms. Sheila Fraser: In fact, I think Dr. Barrados was at the committee on Tuesday where there was a discussion of the expenditure management system. We will think of--

    The Chair: Take it under advisement.

    Ms. Sheila Fraser: Yes, thank you.

    The Chair: Are there any more questions? Okay, we'll consider that part of the agenda closed.

    Moving onto the second part of the agenda, the clerk is distributing the official report of the steering committee this morning. I have my notes here, which I will work from.

    First of all, the committee discussed a response to the letter from the lawyer of Charles Guité when he wrote to the committee in the summertime. There was no unanimity in the steering committee, so I'm going to leave that part until last, and we'll deal with the ones that we did have unanimity on.

    First of all, I want to deal with the report of the Auditor General on December 3, 2002, and the reason I'm doing that is because the Auditor General is at the table in case anybody has a question they want to ask to her.

    The Auditor General has proposed that there be a change in the format when she presents her report on December 3 to the House of Commons. Remember that is not being presented to the public accounts committee. The report will still be tabled in the House at two o'clock in the afternoon. Rather than having her press conference at four o'clock over at the press club, she is proposing that she visit the media lock-up in the West Block at one o'clock to have a press conference with the media. She is also proposing, if I am correct, that the chair, two vice-chairs from the governing party, and a member of all the other parties be there. And I think you also mentioned the Privy Council office and the Treasury Board would be there as well. So everybody would have representation even though the meeting would be held in a lock-up environment. Are we all comfortable with that environment? Are we all okay? Okay.

    We thank you for advising us of the changes, Madam Auditor General, and it looks like it's going to be a go.

º  (1645)  

    Ms. Sheila Fraser: Thank you, Chair.

    I would just add that this is a “we'll see how it goes”. If the committee has any issues with the tabling procedures, we'll be glad to revisit that for future ones.

    The Chair: Okay, thank you very much.

    So going down through the whole report, apart from the first one, on which, as I said, there was no agreement, the 25th and 26th reports of the first session were agreed to by the committee but never presented in the House. We are proposing that these reports be tabled in the House and numbered the first and second reports of this committee, with one editorial change, however. The departments were required to report by December 31, and we're suggesting that this be changed to April 30, 2003, and with that one change, that the reports be tabled in the House.

    The third item concerns the draft reports outstanding, which are “Groupaction”, Parc Downsview Park”, “Financial Information Strategy and Modern Controllership”, “Voted Grants and Contributions”, “Human Rights Commission”, “Health Canada and Public Works and Government Services Canada”. There are six reports there. They have not all been translated at this point in time, but we are proposing that the meetings of November 28, December 5, and December 10 be devoted to these particular reports for the committee to consider in camera.

    Number four, we propose that “Placing the Public's Money Beyond Parliament's Reach”, chapter 1 of the April 2002 report, which Mr. Keddy was talking about earlier on today, be the first item of business in the new year.

    Number five, we propose that the status report of the Auditor General, October 2002...which we have just had; that a hearing be held on the Public Accounts of Canada 2001-02 next Tuesday, November 26; and that there be a meeting on the afternoon of December 3, after the Auditor General tables her report at two o'clock. At 3:30 that afternoon there would be a full meeting of the public accounts committee for the Auditor General to present her report to this committee. We intend to have that televised.

    Are we all in agreement so far? Is there any discussion on this? One, I have a motion regarding travel, and two, there is the issue of no agreement on Guité's letter.

    So let's take what we have agreed upon. Are we all agreed there?

    Mr. Mac Harb: One point, Mr. Chair.

    The Chair: Mr. Harb.

    Mr. Mac Harb: If you recall, at the meeting, and the clerk can verify that, we did not specify the reports. We said we had six reports.

    The Chair: We have six reports and three meetings.

    Mr. Mac Harb: But on the record now you have named the six reports. I would suggest that “Groupaction” not be included in those reports because that's what we agreed, that we would not name them, and the clerk could testify to that.

    The Chair: I thought the agreement was we wouldn't deal with it until we agreed we would deal with it. These are six reports that are outstanding, there are three meetings, and I haven't designated at which meeting we'll do which report. Okay?

    Mr. Mac Harb: Good enough.

    The Chair: So are we all agreed so far?

    Mr. Keddy.

    Mr. Gerald Keddy: No, I'm not agreed with the request to travel that we were discussing.

    The Chair: We're not discussing travel at this point.

    Mr. Gerald Keddy: Okay.

    The Chair: Are we all agreed so far?

º  (1650)  

    Mr. Philip Mayfield: [Inaudible—Editor]

    The Chair: I'm talking, first of all, about the item that says the 25th and 26th reports--

    Mr. Philip Mayfield: Item 2?

    The Chair: Yes, item 2--that we go ahead with one editorial change and that we present it to the House of Commons.

    An hon. member: Agreed.

    The Chair: The third item concerns the three meeting dates--November 28, December 5, and December 10. There are six reports, and it recommends that these three meeting dates be dedicated to dealing with reports.

    The next one is that chapter 1 of the April 2000 report will become the first item of business in the new year. That's not in the written report.

    We've already dealt with the status report.

    The Public Accounts of Canada will be dealt with next Tuesday.

    We've discussed the Auditor General's tabling of her report on December 3.

    On that portion we're all agreed. That is agreed.

    We have two issues now. One is the motion to travel--

    Mr. Philip Mayfield: Don't we need a motion?

    The Chair: Mr. Mayfield moves this.

    (Motion agreed to)

    The Chair: The two issues are these. One is the motion to travel and the travel budget. There has been a request to the public accounts committee to travel to the seventh biennial conference of the Australasian Council of Public Accounts Committees on February 2 to 5, 2003, in Melbourne, Australia. At that point in time they will be discussing a number of emerging issues for public accounts and similar types of committees, including, I believe, GOPAC. As you are aware, GOPAC was formally inaugurated in the House of Commons this fall, and that is one of the items we expect to be discussed.

    There is a motion to travel. At this point in time, the motion says:

That the Chair, two members of the government party, one other opposition member, the Clerk and one analyst travel to Sydney, Melbourne and Canberra, Australia from January 29 to February 9, 2003 to attend the 7th Biennial Conference of the Australasian Council of Public Accounts Committees.

    Is there a mover for that motion?

    It is moved by Mr. Harb. Is there discussion?

    Monsieur Desrochers?

[Translation]

    Mr. Odina Desrochers: I have nothing further to add.

[English]

    The Chair: Mr. Keddy.

    Mr. Gerald Keddy: Yes. I frankly am surprised at the motion, that this committee would choose, for whatever reasons, to treat itself differently from other committees. I don't know why you would approve a motion that two members of the government party, and one other opposition member, which leaves out possibly the other three opposition parties totally, and the clerk, and one analyst would travel to Sydney. This conference is an important conference and one the committee should be paying attention to. I would certainly think every party should have an opportunity to be represented.

    The way it's written, quite simply, the government and the official opposition would represent all the parties in the House. Whether that was intentional or not is beside the point. The issue is quite clear to me that the Bloc, the NDP, the Conservatives, the Alliance, and the government should all have an opportunity to attend.

    I'm certainly not able to attend at that time, but that has nothing to do with the issue that we should have the opportunity, if we would like to go.

    The Chair: Thank you, Mr. Keddy.

    I presume you are amending the motion.

    Mr. Gerald Keddy: I'd certainly want to amend the motion so that all the opposition parties are represented.

    The Chair: So you're talking about two members of the governing party, two members of the official opposition, and a member from the Bloc Québécois, the New Democratic Party, and the Progressive Conservative Party?

    Mr. Gerald Keddy: If that is the way the breakdown would go, absolutely; if not, one member of each official party is fine, but if that's the way the breakdown would normally go, Mr. Chair, that would be my amendment.

    The Chair: Mr. Finlay.

    Mr. John Finlay: The chairman is always a member of the opposition. You don't need to put another opposition member from the Alliance there.

    Mr. Gerald Keddy: I think we work on the assumption that the chair is as neutral as the chair can be.

    The Chair: Of course the chair is always neutral.

    Mr. Keddy has amended the motion to say that there will be two government members, two members from the Canadian Alliance, a member from the Bloc, a member from the New Democratic Party, and a member from the Progressive Conservative Party. Is there any further discussion on that motion?

º  (1655)  

[Translation]

    Mr. Odina Desrochers: Are we voting on the amendment, Mr. Chairman?

[English]

    The Chair: All those in favour of the amendment to the motion?

    (Amendment negatived)

    The Chair: We're back to the original motion: two from the government side and two from the opposition side.

    (Motion agreed to)

    The Chair: The second motion is that a travel budget not exceeding $80,000 be adopted, that the chair and the clerk be authorized to finalize the amount, and that the chair seek the necessary funds. Now, we had originally proposed a budget of $53,995.84. We talked this morning about increasing that, but I think there's also....

    Mr. Harb.

    Mr. Mac Harb: I would like to propose something here, that should the committee be able to get the $80,000, members of the other political parties should be allowed to come along. But should the committee fail to guarantee those extra funds, then we'll go back to two opposition members and two government members. I quite sympathize with Mr. Keddy's point; I think it's a very valid point.

    Mr. Gerald Keddy: They're never going to approve the money, so it's not going to matter.

    The Chair: I sit on the liaison committee, which is the next level of approval; it's not the final level but the next level of approval.

    There is not enough money for all the committees' requests to be acceded to. Ask for too much money and nobody goes; ask for what the committee will approve and some people can go. That's why it's four and not seven; that's what the proposal was.

    I understand Mr. Harb's point that perhaps we can all just travel business class and go for it. Those are the rules regarding the civil service, and why should we not follow the civil service rules? We have been able to cut the cost down, and if we can cut the cost down, then perhaps more can travel. But the liaison committee is not a negotiating situation. We go in with a request and say, there it is. Then it's either stamped approved or stamped rejected. This is the point I'm at, and let the committee give me direction.

    We have a motion that $80,000 be adopted. Using the cheapest possible way we can get there, we can do it at $53,994. Therefore, do you want the clerk and the chair to go forward with a request for $80,000, which will, as Mr. Harb pointed out, accommodate the other three parties, or do you want us to cut back and increase the chances of approval?

    Mr. Desrochers.

[Translation]

    Mr. Odina Desrochers: I can understand wanting to accommodate all opposition members, but rarely is the Public Accounts Committee called upon to travel outside the country. There are many other House committees, notably the Health Committee...However, I agree that we should request the maximum possible. I want this mission to go ahead. Therefore, you need as much room to manoeuvre as is necessary. Obviously, it would be to the advantage of Canada's Parliament to have all opposition parties represented. However, if you're saying that the entire mission could be jeopardized if our budget request is unacceptable, then I will defer to your good judgment. In my view, it's critical that this mission go forward because Australia has demonstrated on numerous occasions that it is very much in the forefront in public accounting.

    If memory serves me well, the Public Accounts Committee primarily travels within Canada and members use their travel points for this purpose. You have every reason to argue that for once, the Public Accounts Committee should travel outside the country. However, you should accept the room to manoeuvre that you are being given today.

[English]

    The Chair: I have asked the clerk to give me some rough numbers. With three more people travelling, it will be $81,000. Therefore, I'm going to suggest that the motion be amended so that a travel budget not exceeding $83,000--giving me a little buffer--be adopted and the chair and the clerk be authorized to finalize that amount and the chair seek the necessary funds. My intention will be that every party be represented.

    Mr. Keddy.

»  (1700)  

    Mr. Gerald Keddy: I still haven't heard an answer on whether or not the committee would intend to use their points, first of all, to travel within Canada to get to British Columbia. Secondly, we just made a motion, and you guys all voted for it, that the other three opposition parties would not go. The Bloc Québécois voted, and they voted themselves out of the committee because they're not necessarily one of the members that will go, and now you want to amend that motion. So with the procedure here you've lost me.

    The Chair: One point at a time.

    If we approve an $83,000 budget, then we can--in addition to the motion we passed--in a new motion, rule that the Bloc, NDP, and Progressive Conservative parties travel as well. So that's where we're at. If we say $83,000, then I will try to get every party represented on the visit to Australia, and if I'm successful, then that's the way it will be.

    Mr. Gerald Keddy: What about travel in Canada, Mr. Chair, using our points? That was my original question.

    The Chair: The liaison committee has never looked at it from that perspective in the past for committees travelling overseas. As you know, the public accounts committee, when we meet at the Canadian Council of Public Accounts Committees, when we travel--and this year it was in Newfoundland--we use our points, which is an unusual thing because quite a number of committees, when they are travelling as committees, say, give us the money. We have been using our points, and again let me bring that up with the liaison committee. I hear your direction.

    The key, of course, is to try to get all parties there, and it's a balancing act between dollars and numbers. If you can leave it with the chair, I will do my best. Give me the authorization and then I will proceed.

    Number 6 is that the travel budget not exceeding $83,000 be adopted, that the chair and the clerk be authorized to finalize the amounts, and that the chair seek the necessary funds.

    (Motion agreed to)

    The Chair: We have a new motion, which is that the chair seek that members of the Bloc Québécois, the New Democratic Party, and the Progressive Conservative Party also accompany the delegation, along with two members of the governing party and the opposition party.

    Mr. Paul Forseth: Can we just add “be offered the option”? Can we adopt that wording as a friendly amendment?

    The Chair: The motion is there that I do my best to get all three other parties as well.

    Mr. Shepherd.

    Mr. Alex Shepherd: In terms of what you pointed out in your guidance, it occurs to me, and I've seen this countless times before, that the travel cost can be significantly reduced if you can constrain the members who want to go--in other words, if you know by a certain timeline the people who are going to go and they commit themselves to go.

    I hear what you said about business class and economy, but an airline ticket to Australia is $3,000. If you're going to go first class and you're going to wait two weeks before you go, it's going to cost $6,000 or $7,000.

    The Chair: Eleven thousand dollars.

    Mr. Alex Shepherd: Eleven thousand. So it's all about committing members here. You can easily reduce those costs.

    The Chair: That's why we say we could do it for less. So let's pass this motion and let's have all parties represented.

    All those in favour of the motion that in addition to the two members from the government party and the opposition, the Bloc Québecois, the New Democratic Party, and the Progressive Conservative Party also be represented?

    (Motion agreed to)

    The Chair: Now to the item that did not have consensus.

    Mr. Harb.

    Mr. Mac Harb: In the interests of time, I would like to postpone this until the next meeting. I have another event taking place and some of my colleagues may have to catch a flight. It's going to take quite a bit of time.

»  (1705)  

    The Chair: Yes.

    Mr. Desrochers.

[Translation]

    Mr. Odina Desrochers: This issue was in fact discussed at considerable length this morning. Personally, I have no objections to a postponement. However, you raised a number of points, Mr. Harb. That's why I'm proposing a fairly lengthy postponement to allow the Chair, the clerk and the researchers enough time to assess the scope of the letter from the lawyer, Mr. Guité.

    Therefore, I propose that the Chair, the researchers and the clerk do whatever is needed to decide whether or not the committee should answer Mr. Guité's letter. I would postpone any discussion, not until next week, but until even later, given the number of questions that have been raised. Among other things, there was some question of verifying what the press had said. For all of these reasons, I believe this would be a better compromise than what was agreed to this morning.

[English]

    The Chair: I appreciate Mr. Harb's point.

    Mr. Desrochers, as you heard this morning, our law clerk of the House of Commons is here. He said he is able to offer his opinion and advise the committee on what we should or should not do with the letter. It's up to the committee to decide what to do. But he feels capable of advising the committee without having to go back and read all the newspaper articles and whatever other media issues there were on it. In fact I think he specifically stated that even if he did read them, he certainly wouldn't be able to comment on them because he would therefore have to check with the person who allegedly said something, whether or not they had said it, and so on. It started becoming a complex issue. It is a contentious issue, and it was contentious this morning.

    So the question is whether we get into it now or later. The law clerk felt quite competent to speak on behalf of the letter.

    Ms. Meredith.

    Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Just for my clarification, as I wasn't here this morning, what letter are we talking about? Are we talking about the letter we knew about before Parliament was prorogued last spring?

    The Chair: We're talking about the letter that was sent to Mr. Rumas, the clerk of the committee, dated July 12, 2002, from Edelson & Associates, who are the lawyers for Mr. Guité. He took exception to the comments in the media for an in camera meeting.

    Ms. Val Meredith: With all due respect, Mr. Chair, I think it is redundant to even react or respond to a letter that old, which hasn't been responded to already. It was a letter of July 12. It is now November 21.

    I would suggest if we haven't heard anything more from these individuals, the matter has probably been placed aside.

    The Chair: Mr. Harb.

    Mr. Mac Harb: Mr. Chair, to the contrary, this is the first opportunity we've had as a committee really to look at the issue. So we can't really use the issue of time and the summer to say we are not going to respond.

    In fact there are some serious comments made in this letter. Some of them talk about breaking the rules of the House, in a sense; about parliamentary privilege; and about the fact that this is an issue before the RCMP, with a criminal investigation taking place. It also talks about information specific to one member of the committee's comments to the media and the lawyer getting a call from that specific media outlet. It talks about disclosing the content of a hearing that was supposed to be in camera.

    There are a series of things in this letter. For us as a committee not to respond I think would be highly unfair and inappropriate. I would like to serve notice that should we as a committee decide to ignore it, I will be taking it to the House of Commons as a point of privilege, as a member of Parliament and as a member of this committee. Then I will ask the Speaker of the House of Commons to rule on it.

    I would rather see this committee deal with it on a non-partisan basis, clear the air once and for all, and move on with the business of the committee. We cannot just brush it under the carpet. This is a very serious matter; it has affected the credibility of the committee as a whole.

    The Chair: Okay.

    As you can see, there are differences of opinion on this issue. I had some discussions with some members on both sides—but not everybody—an hour or so ago, that if left with me to see what I can do, I will bring it back at perhaps Tuesday's meeting.

    On Tuesday you always have the right to raise a matter of privilege in the House, Mr. Harb, with or without notice to this committee.

    So leave it with me until Tuesday, and we'll bring the issue up again.

    Mr. Keddy.

»  (1710)  

    Mr. Gerald Keddy: Mr. Chairman, I have one other issue, if we're finished with this piece of business.

    The Chair: I think we're finished with this piece of business.

    Mr. Gerald Keddy: I guess I want a point of clarification, really.

    Mr. Harb, if you could stay for just one second, I'd appreciate it. I stayed so we could keep quorum.

    The issue is notification of meeting. We're all busy. A number of us sit on more than one committee. We're not always able to make these committee meetings. It's absolutely important that we do, not only for the fact that there are important issues being discussed, but in order to maintain quorum.

    That's the reason I asked the Auditor General about when she was notified. If she's going to be available Tuesdays and Thursdays, I realize it may not always be possible, Mr. Chair, but certainly it would be better for us, as committee members, if we could get our notice as early as possible.

    I received this notice of meeting late yesterday afternoon. Mr. Desrochers received it on November 19, which was the day before. It may be just a matter of making sure the notices all go out at the same time to government, opposition members, etc. It's an important issue for me. I almost didn't come to this meeting anyway. I had lots of other things to do. Not only would I have missed it, but the committee wouldn't have had quorum.

    The Chair: Thank you for your comment, Mr. Keddy.

    As you know, the committee has had a long time in getting started. Normally when we come back in mid-September, our committees are back in business. We had prorogation and so on and so on. Here we are at the end of November.

    Mr. Philip Mayfield: Mr. Chairman, would it be in order for me to respond to Mr. Harb? I have some comments and suggestions for the committee too. Do you want that now or later?

    The Chair: Just let me finish my comments to Mr. Keddy first, and I'll come to you, Mr. Mayfield.

    On Tuesday I said I had taken it upon myself to bring the Auditor General here today on the status report because it's a relatively non-contentious issue. I also took it upon myself to set up a hearing on the Public Accounts of Canada next Tuesday. The steering committee wasn't going to meet until this morning. The steering committee has now set out a schedule of business, starting with next Tuesday, then next Thursday, the following Tuesday, the following Thursday, and so on. These meetings have now been set by virtue of the steering committee today. I took it upon myself. I made the announcement on Tuesday. The clerk got the information out on Wednesday.

    So on a normal basis, you know ahead of time what the schedule is. Is that okay?

    Mr. Gerald Keddy: Yes.

    The Chair: Mr. Mayfield.

    Mr. Philip Mayfield: Mr. Chairman, I'm interested in Mr. Harb's comments.

    Mr. Guité has not only had his lawyer write a letter to the committee, but he's been active in speaking to the media as well. What concerns me is that we had him where he could speak to this committee in confidence, and he didn't tell us the whole story. I believe the comments in the newspaper justify us having him return to complete his testimony, which was not complete, by looking at what he has said to the media.

    Therefore, I am moving that this committee call Mr. Guité back for an in camera meeting to continue his comments with this committee and to receive questions from its members.

    The Chair: Two things, Mr. Mayfield: one, we don't have quorum; and two, you may be aware that two days ago we passed what we called the 48-hour rule.

    Mr. Philip Mayfield: Well, seeing as we don't have quorum, I can't ask to have a vote because of all-member agreement.

    An hon. member: It could be a notice of motion, though.

    Mr. Philip Mayfield: I will move or cause to be moved the motion I gave.

    The Chair: You have given the committee notice.

    Mr. Philip Mayfield: There you are. You're free, Mac.

    The Chair: It will be on the agenda on Tuesday.

    I think the meeting is adjourned.