PACC Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Tuesday, December 3, 2002

¹

1530

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

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

¹

1535

¹

1540

The Chair

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

Ms. Sheila Fraser

¹

1545

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

¹

1550

Ms. Sheila Fraser

The Chair

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

Ms. Sheila Fraser

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

Mr. Odina Desrochers

Mr. Hugh McRoberts

¹

1555

Mr. Odina Desrochers

Mr. Hugh McRoberts

Ms. Sheila Fraser

Mr. Odina Desrochers

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

Ms. Sheila Fraser

Ms. Beth Phinney

Mr. Douglas Timmins (Assistant Auditor General, Office of the Auditor General )

Ms. Beth Phinney

Mr. Douglas Timmins

º

1600

Ms. Beth Phinney

Mr. Douglas Timmins

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

The Chair

Ms. Sheila Fraser

The Chair

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

º

1605

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

Ms. Sheila Fraser

Mr. Philip Mayfield

The Chair

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

º

1610

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

Mr. Odina Desrochers

Ms. Sheila Fraser

The Chair

Mr. Mac Harb (Ottawa Centre, Lib.)

Ms. Sheila Fraser

Mr. Mac Harb

º

1615

Ms. Sheila Fraser

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Ms. Sheila Fraser

º

1620

Mr. Hugh McRoberts

Mr. Shawn Murphy

Ms. Sheila Fraser

Mr. Shawn Murphy

The Chair

Mr. Yvon Godin (Acadie—Bathurst, NDP)

Ms. Sheila Fraser

Mr. Yvon Godin

º

1625

Ms. Sheila Fraser

Mr. Yvon Godin

Ms. Sheila Fraser

Mr. Yvon Godin

The Chair

Mr. Yvon Godin

Ms. Sheila Fraser

º

1630

Mr. Yvon Godin

Ms. Sheila Fraser

The Chair

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

Ms. Sheila Fraser

Mr. Paul Forseth

Ms. Sheila Fraser

º

1635

Mr. Paul Forseth

Ms. Sheila Fraser

Mr. Paul Forseth

The Chair

Mr. Alex Shepherd (Durham, Lib.)

Ms. Sheila Fraser

Mr. Hugh McRoberts

Mr. Alex Shepherd

Mr. Hugh McRoberts

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

Mr. Alex Shepherd

Ms. Sheila Fraser

º

1640

Mr. Alex Shepherd

Ms. Sheila Fraser

The Chair

Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.)

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

Mr. John Bryden

Ms. Sheila Fraser

º

1645

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

Mr. John Bryden

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

Ms. Sheila Fraser

º

1650

The Chair

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

Ms. Sheila Fraser

Ms. Val Meredith

The Chair

Mr. Philip Mayfield

Ms. Sheila Fraser

º

1655

The Chair

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

Ms. Sheila Fraser

Ms. Beth Phinney

The Chair

Mr. Gerald Keddy

Ms. Sheila Fraser

Mr. Douglas Timmins

The Chair

»

1700

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

Ms. Sheila Fraser

The Chair

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CANADA

Standing Committee on Public Accounts

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NUMBER 006

l

2nd SESSION

l

37th PARLIAMENT

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EVIDENCE

Tuesday, December 3, 2002

[Recorded by Electronic Apparatus]

¹  (1530)  

[English]

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

    Today, pursuant to Standing Order 108(3)(e), we consider the December 2002 report of the Auditor General of Canada, which, as we all know, was tabled in the House of Commons about an hour and a half ago.

    Our 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. Douglas Timmins,Assistant Auditor General; and Mr. Hugh McRoberts,Assistant Auditor General. Now the Auditor General has tabled her report, this is a full meeting of the public accounts committee, and she is now going to present her report to this committee, because her report stands permanently referred to this committee. From this we will then determine which chapters the committee will investigate more fully in the new year.

    I would ask the Auditor General to give us a review of the report she has just tabled in the House of Commons.

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

    I appreciate this opportunity to meet with the committee to discuss the report that was tabled earlier today, which is my fourth report since taking office in May 2001. As you mentioned, I am accompanied by the assistants responsible for many of the audits contained in the report.

    As Auditor General, my role is to promote greater government accountability and a more effective public service. Canadians are increasingly demanding both. This report deals with two issues of great concern to me, first, the need for Parliament to receive full and accurate information from government, and second, the government's ability to successfully manage its long-term reform initiatives.

    Accountable government requires that members of Parliament be able to approve the government's plans for spending and then scrutinize the results of that spending. To do this properly, Parliament needs sufficient information about costs and expected results. When it comes to the Canadian firearms program, Parliament could not fulfil this vital duty, because it was never given a realistic estimate of what the program would cost to implement or explanations for changes in the program along the way. Back in 1995 the Department of Justice told Parliament the program would cost taxpayers about $2 million. The department now says that by 2004-2005 the cost of this program could amount to more than $1 billion. Even though the department has many explanations for this ballooning of costs, it never shared them with Parliament.

    The issue here is not gun control, and it's not even about the astronomical cost overruns, although they are serious. What's really inexcusable is that Parliament was in the dark. I question why the department continued to watch the costs escalate without informing Parliament and without considering alternatives.

[Translation]

    My report also brings to light other instances in which Parliament is not being given the information it needs to authorize large expenditures of public funds.

    For example, the government still has not taken the steps required to obtain Parliament's authorization to create Downsview Park. I believe that spending more than $100 million of taxpayers' money over the next 20 years requires formal parliamentary approval. This is the third year in a row that I am drawing attention to this issue. I hope it will be the last. I look forward to reading your committee's report on this matter.

    But I'm happy to report that the news is not all bad.

    Significant advances have been made in providing vital information on health to our elected representatives and to Canadians. This fall, for the first time, the federal, provincial, and territorial governments published indicators of the performance of their health systems.

    Canadian legislative auditors were asked the verify the accuracy of the health data. We conducted this work for the federal government and the three territories. In my view, adding an opinion attesting to the information's validity makes the reports more credible.

    Good national health statistics are vital to a fully informed public debate on the future of our health system.

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[English]

    Moving on to the second major area that concerns me, I am disappointed by the government's lacklustre progress in achieving key government-wide management reforms. Over the years the government has launched several ambitious initiatives with far-reaching and very commendable objectives. They range from improving the security of information technology systems, to reforming the human resource management system, to modernizing comptrollership and strengthening financial management and control. Unfortunately, I see a large gap between the government's commitment and what it has actually achieved in all these areas. Given the size of government, any initiative it seeks to change how government functions is a formidable challenge, progress is especially difficult, and momentum may be hard to maintain when the agenda extends over several years.

    To succeed, the commitment to change must be translated into concrete action through strong leadership on the part of senior management and the central agencies, such as the Treasury Board Secretariat and the Privy Council Office. Clear direction is essential. Government must do more than say where it wants to go, it must also explain how it will get there. Those responsible for implementation must be held accountable for achieving key milestones by specified target dates.

[Translation]

    Take the initiative to improve government financial management, for example. more than 40 years ago, government started to modernize the way it manages and controls its finances. It has spent an enormous amount of money—hundreds of millions of dollars—to set up state-of-the-art financial systems. And yet, public service managers still cannot easily find out the true cost of their programs, nor do they have complete and reliable information on the assets and liabilities they are responsible for managing.

    Canadian taxpayers expect more. They expect federal program managers to base their decisions on accurate and complete financial information, which reflects the true costs of their programs. And they certainly expect the people running government departments to know if the public money they are spending is actually accomplishing what it is supposed to.

    The initiative aimed at improving financial management and control has not received the commitment and leadership it needs to succeed. For an organization that spends almost $180 billion a year, this is not acceptable. It is time for government to get serious and get on with making the necessary improvements.

    Your committee's reports to the House and hearings on the government's progress in implementing the financial information strategy are very important and I hope that you will continue to follow this initiative closely.

[English]

    To return for a moment to accountability, the bedrock of our democratic form of government, Canadians sometimes tell me they don't think government is accountable, that those responsible for managing programs, which should mean producing results while playing by the rules, aren't watching closely enough, and that nothing seems to happen when things go wrong. If Canadians are to have confidence in government, it must account for its performance in a clear and timely way.

    Today's public sector is a changing one. The government now delivers many policies and programs through arrangements with the provinces and with private sector organizations. We're seeing a new culture of results-based management emerge, as well as more encouragement for managers to innovate and to take reasonable risks. All of these developments challenge our traditional notions of accountability.

    We think it's time for a definition that better fits new realities. One of the chapters in this report proposes an enhanced definition of accountability in response to these changes. It stresses the importance of the means used as well as results achieved. It points to the obligations of all parties. It underlines the need for review of performance by managers and by Parliament. It emphasizes the importance of transparency in the accountability process. Finally, it takes into account managing for results and sharing accountability among partners. Essentially, what I am saying is that rules should be few, clear, meaningful, and consistently applied. Meaningful rules are those that directly support the principles of fairness, propriety, and good stewardship of public funds.

[Translation]

    Now, in the area of first nations reporting, the existing rules don't seem to be meaningful at all. When we looked at a selected group of first nations, we found that those communities are required to submit at least a total of 168 reports a year to four federal organizations in order to receive funding.

    This is an onerous burden for these communities, most of which are small and located in remote areas. But what's worse is that the bulk of this information is never used.

    There's not much point in first nations exchanging data for dollars with the federal government when the information is of no real benefit to either party.

    Good reporting is essential for accountability and for good management. First nations want and need a reporting system that actually helps them to manage their own affairs as well as meet the requirements of federal organizations.

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[English]

    Let me spend a moment talking about rules of another kind. The income tax rules for foreign affiliates are having a significant impact on Canadian taxpayers. Over the last 10 years these rules have resulted in forgone tax revenue totalling hundreds of millions of dollars. We first raised this issue a full decade ago. It was looked at by the public accounts committee in 1993 and again in 1997. The Minister of Finance's technical committee on business taxation also sounded the alarm. It's time to fix this.

    Before concluding, I would like to draw one other matter to your attention, namely, the failure to observe the best possible management practices to ensure that taxpayers are getting good value for money. This report notes several such examples, some of them long-standing, that need to be addressed. Fisheries and Oceans Canada needs to better manage its navigational support and boating safety activities to meet the changing needs of boaters. The Canada Customs and Revenue Agency would be able to make better use of its scarce international tax expertise if it improved its assessment of risk. Better strategic planning would help the Real Property Services Branch of Public Works and Government Services Canada get the best value in the office space it acquires for government use. Finally, an up-to-date strategic plan would help the Canadian Space Agency plan its workforce to support its priorities.

    These are only a few of the issues we cover in this report. I hope the committee will consider hearings on as many of the chapters as possible between now and our next report in April 2003.

    We would be pleased to answer any questions the committee might have.

    Thank you.

    The Chair: Thank you, and, on behalf of the committee and the Parliament of Canada, I would like to thank you for this report. We also thank you, as an officer of Parliament and our watchdog on the government, for looking into awkward issues and reporting them to us.

    We'll now turn it over to questions.

    Ms. Meredith, for eight minutes.

    Ms. Val Meredith (South Surrey—White Rock—Langley, Canadian Alliance): Thank you, Mr. Chair, and I'd also like to thank the Auditor General and her staff for coming up with some issues for us to deal with that bring to light for Canadians just some of the issues the government has yet to address.

    I got the impression from your presentation that there are areas the government has been working on, particularly the 40-year project for good management, where it indicates it has every intention, reads your reports, understands what you are saying, doesn't disagree that it is going to act on it, but it doesn't. Your report this time indicates a number of areas where that is the case, where the good intentions don't lead into any kind of real action. How does one get the government to react? I guess the accrual accounting process is certainly one way, responsible management, accountability. How does one get the government to actually respond in kind?

    Ms. Sheila Fraser: Thank you, Mr. Chair, and I thank Ms. Meredith for her kind words.

    As I mentioned in my statement, it is not easy to bring in these large reform initiatives that take several years, and I think, on the part of senior people, there is a genuine desire and commitment to move ahead. There are difficulties in two areas. First, because the initiatives take a long time, they tend to lose momentum as you go ahead, and if you don't have the detailed implementation plans, they never get put into practice. So while you can make grand announcements about change initiatives, if they doesn't actually change how people do their jobs day to day, it's not going to happen. I think there is a difficulty in getting the initiative to go all the way down to the people actually doing the job, and for that, we have often brought up in our audit reports that there need to be more detailed action plans. There needs to be monitoring to make sure things are happening by the time they're supposed to happen within the costs they're supposed to come in on.

    The other issue is that things just seem to take a very long time sometimes to happen. I don't, unfortunately, know all the reasons for that, but accrual accounting, accrual budgeting, accrual appropriations are issues that have been before this committee several times. I would hope that the committee also asks again where government is at in all this. Too often the response is, we're studying it, or, we're analysing it, and the studies never seem to end. We have to end the studies and get on with the action.

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    Ms. Val Meredith: One thing you've consistently brought up is the lack of managers following the rules and the regulations that are put in place by the Treasury Board. At chapter 2.107, on Fisheries and Oceans, you make the comment:

The Department has not cost-effectively managed the functions we examined and changes have to be made to ensure the system meets the user needs in the future.

I want to bring to your attention something that was brought to my attention on Friday, that the coast guard is planning on buying a British-made hovercraft through a sole-source procurement. A Canadian company has tried to get the information about it. They were told to check the e-mail or the bidding things to find out when this project would be available, but they never were able to get hold of anything. The last bulletin they were able to get was that details were issued earlier this month and advance notice of a contract award to the British firm. So this Canadian company had no opportunity to bid on the project, even though they went through a recent full evaluation of their product by the United States Coast Guard and passed with flying colours. Their procedures are more stringent than the Canadian procedures. So they're asking why they missed out on the opportunity to bid in an open bidding process with the coast guard on this.

    You mentioned that the coast guard has four management units, not one management unit. Who is responsible for making these kinds of decisions on behalf of the government?

    Ms. Sheila Fraser: As you probably know, we've raised the issue of advance contract award notices, ACANs, several times. The government views these as being a competitive process, and on that we have a fundamental difference of opinion with the government. We believe these notices provide perhaps more transparency to the contract process, but certainly do not increase the competitiveness or allow for an open bidding process. We note the example you've raised, and we'll perhaps ask a couple of questions ourselves.

    Ms. Val Meredith: But is it because there are four management units with the coast guard? Is it because there isn't one central body that's responsible for making these kinds of decisions? How does this sort of thing happen?

    Ms. Sheila Fraser: In government, with the procurement roles, ACANs are increasingly being used and are being increasingly viewed as acceptable contracting procedure, which has been the subject of several of our audits and much of our concern. This process of posting on a site and indicating to people that you plan to award a contract to someone, if no one signals a disagreement with that, is viewed as competitive. We don't believe it is competitive. Obviously, it would be the procurement agents within the department managing that process. I don't know specifically who they would be, but they should be aware of the process, and they should be aware of the rules of competitive tender.

    Ms. Val Meredith: In your chapter 1 on the first nations you brought to our attention that the first nations had--I understand it was only Saskatchewan you were looking at--an estimated 168 reports that they were to provide to various government agencies. You seemed to feel that there should be a better way of monitoring that. Not only was it a job creation project on the reserve, but they spent more time and resources on filling out those reports, and there was a better utilization of the money, it could have gone into delivery of services.

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    Ms. Sheila Fraser: You're right. There were two issues raised in this audit. One is the number of reports. If you look at each program by itself, the reporting requirements may not seem excessive, but when you combine them all together, it becomes way too many. It's at least 168, and you could have over 200, if you had another funding formula. So what we're saying is that there should be better coordination, there should be better streamlining of all of this, to reduce the number of reports.

    Second, we went to look at what usage was given to these reports, and they were not being used. All these reports are being produced and are not being used, so one could question this. There has to be good reporting in the whole accountability process, but you have to make use of the information you're receiving too. So there needs to be a rethinking on the actual requirements and the most efficient way to simplify this reporting mechanism.

    The Chair: It sounds like bureaucracy at its finest--reports that do nothing and nobody reads.

    Thank you very much, Ms. Meredith.

[Translation]

    Mr. Desrochers, please, you have eight minutes.

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

    Ms. Fraser, I would like to congratulate you once again on the publication of your report today and also on all the information sessions planned since this morning. We attended an in camera briefing session on the report and then we attended your press conference. We also saw the first reactions this afternoon in the House and now we have the opportunity once again to ask you questions on this report and hope that this time people will be more attentive. Given all the efforts you made today, we hope there will be some political will to do so.

    Madam Chair, I would like to go back to the issue of Public Works. You say:

    

Better strategic planning would help the Real Property Services Branch get the best value in the office space it acquires for government use.

    Do you know what criteria Public Works uses? I know from experience that in Quebec, they resort to the Société immobilière du Québec. There is a competitive bidding process and then very specific criteria are used to determine which office buildings best meet the needs of government workers.

    Does Ottawa follow that same method or a different one?

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

    What we found, especially in this report, is that the department does not assess all the various options when it leases or purchases office space.

    I will ask my colleague Mr. McRoberts whether he is familiar with the office space acquisition process.

[English]

    Mr. Hugh McRoberts (Assistant Auditor General, Office of the Auditor General ): Basically, there is a series of choices that should be looked at each time an acquisition is being set up. Do you want to put these people in owned accommodation, or do we want to build owned accommodation for them. Do we want to lease? Do we want to lease for a short term, a medium term, a long term? If people are already accommodated in a lease situation and the lease is coming up for renewal, you want to say, do we want to renew, do we want to move, and if we want to move, do we want to move to another lease or to owned accommodation? Each of these takes time to do, but also it's important, particularly in a renewal situation, if you're going to get best value for the taxpayers' money, that you act in a timely enough manner that options other than renewal are realistic options. Our concern was that they weren't evaluating all the options and, in many instances, were not doing their evaluations in a sufficiently timely way.

[Translation]

    Mr. Odina Desrochers: I see.

    However, in your audit, could you tell whether the government preferred owning the offices rather than leasing them? We know that leasing can sometimes be attractive to the owner.

[English]

    Mr. Hugh McRoberts: That was one of our concerns when we were looking at the development of the strategic plans. Public Works operates on a portfolio basis for each of the major regions. Ideally, you would want to be making choices between ownership and leasing in a balanced manner. To do that, you must have a long-term plan, so that you know what you're going to do as accommodation needs change. Our concern was that in some regions the plans had not been done, and in other regions the plans were out of date, so that these decisions were being made on an ad hoc basis.

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[Translation]

    Mr. Odina Desrochers: You spoke about the regions. Did you identify regions where there was clearly less strategic planning of office space?

[English]

    Mr. Hugh McRoberts: I'm sorry, I'm not that familiar with the details of the work. We can find out for you, though.

[Translation]

    Ms. Sheila Fraser: Mr. Chairman, we could provide an answer to Mr. Desrochers' question at a later date.

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

[English]

    The Chair: Okay.

    Ms. Phinney.

    Ms. Beth Phinney (Hamilton Mountain, Lib.): Thank you.

    As I mentioned during the debriefing earlier today, I'm particularly interested in what you recommended to the Canada Customs and Revenue Agency about protecting against dumped or subsidized imports. Mr. Timmins commented this morning that the study that was done was 1999-2000. The two steel companies in Hamilton, which at that point had profits that were declining significantly, are now doing very well. Is it because they've already implemented most of the recommendations made by the two committee studies? Is that the reason for the change in the last two years?

    Ms. Sheila Fraser: I would just like to clarify. We looked at findings and, if you will, issues that have been brought before the tribunal, and those are listed. We looked at specific cases, and there are still cases that go back to 1999. That's when the case was brought before the tribunal. I don't know if Doug wants to add some more.

    Ms. Beth Phinney: Why in the last two years has it changed from what you reported in here to what they are today?

    Mr. Douglas Timmins (Assistant Auditor General, Office of the Auditor General ): Our report is on the sixteen recommendations that were made by the subcommittees, and we've looked at the action they've taken to try to deal with those issues. Most of those issues would deal with administrative arrangements, changing responsibilities between the CCRA and the CITT. With this specific case--and they are listed, as Madam Fraser has mentioned, in the appendix--we did not review or make recommendations in relation to those specifics. Those would have been rulings of the CITT, and so they would have prevented dumping, effective on the dates you see in this report. Dumping restrictions would be in place for five years after that. Then they would be up for review under the expiry review process.

    So in effect, what we're saying here is that from the point of these hearings, whatever would have been injurious to Canadian industry would have been no longer permitted, and that would remain in effect today. Although I can't say for sure, the implication would be that this would account for the turnaround, because dumping would no longer be permitted.

    Ms. Beth Phinney: Okay.

    This morning you said there were barriers, especially for the small and medium-sized producers. Could you go over that again? We just touched on it briefly at the debriefing.

    Mr. Douglas Timmins: Yes. One of the recommendations of the subcommittees was that there should be further efforts on the part of, particularly, CCRA to ensure that the small and medium-sized producers had equal access to the SIMA process, which involves significant time and effort and is a difficult process. Part of this would be to familiarize them with the process, to look at ways they might remove some of the burden. It's certainly very costly when hearings are involved. So part of it was to be education, familiarization, to see what assistance they could provide and how they might manoeuvre their way through the onerous process. The large firms have expert assistance that is, again, very costly, but they're very familiar with the rules and so on.

    There are certainly barriers. There was a plan put in place by CCRA back in 1998, but because of insufficient funds, they were not able to fund it, and they curtailed that plan in the same year. In response to our recommendation in that regard, they have indicated an intention to reinstitute it.

º  (1600)  

    Ms. Beth Phinney: So if a small or medium-sized producer has to go for the hearings, do they have to pay all of that themselves, or is there any help from the government, if the government decides there's good reason to have hearings? Does the individual business person have to look after all of that themselves?

    Mr. Douglas Timmins: All their preparation, their submission, the lawyers, and all of that, yes. The range can be $100,000 to $500,000 to do that.

    Ms. Beth Phinney: More than the company might make in profit in the year.

    I have a question following up on Mr. Desrocher's question on better strategic planning for the Real Property Services Branch for Public Works and Government Services, with reference to chapter 8.38:

Staff of the Branch told us that often they do not get timely information on the demand for accommodation and that client departments' requirements can change during the accommodation process.

We have a new government building almost finished in Hamilton; it's a great building and we really like it. We're not in it yet, but we've seen it, and the rumour is out that it's not big enough. This was only started last year. Is this what you're meaning, that somebody hasn't been watching to say, before you start that, it's taken us three years to agree that we're going to build a building, and in that time our requirements have changed, we need three more floors on this building?

    Ms. Sheila Fraser: That's exactly it, that when departments or parts of departments need space, they change their requirements as they're going through the process, rather than thinking ahead to how much space they actually need. Are programs going to be expanding? Will there be more people there? Are they bringing in a new activity, for instance? So there's not enough forward thinking before they actually start into the process of acquiring space.

    Ms. Beth Phinney: This building is just to accommodate the federal workers who are already there, there's not even any planning to enlarge it. It just will not now accommodate the employees who are already there.

    Thank you.

    The Chair: Thank you, Ms. Phinney.

    I forgot to mention that the Auditor General has a commitment at 5 o'clock, so the meeting will have to wrap up then. Am I correct in saying that?

    Ms. Sheila Fraser: Yes.

    The Chair: We're now moving on to the second round, which is four minutes each.

    Mr. Mayfield.

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

    I would like to again publicly commend the Auditor General and her staff for presenting this material, for expressing concerns, and for standing up for Parliament. This is something that's been a concern of mine for a long time, and I appreciate the support I feel you're giving me in this direction. That's exactly the area where I want to begin asking questions of you.

    In your statement, Mrs. Fraser, you mentioned that the issue is not gun control, despite the debate over what gun control is or is not and the high cost, but accountability. I appreciate that. You've also raised the issue of Downsview Park with much the same tone of voice. Here is a program that's been set up, there has been strange stuff happening with loans made and land sold, but the money that went from the land didn't go to the loan, it went back to the corporation. Parliament wasn't involved in any of that either.

    I notice in the paper this morning news that there has been a second audit of Public Works, 276 files in one instance, 304 in the other. Nobody is really able to get this information, but you've been publicly quoted as saying you praise the internal audit that triggered the investigation. It's candid, frank and one of the toughest produced in government.

    What is this audit about? I'm also concerned about whether Parliament is being deliberately left out of the loop. Or is it just that people are so busy that they've forgotten we're here? What is Parliament going to do to get in the loop, for goodness' sake? We go to question period day after day and people chat and talk. As one very junior staff member once said, they never answer the questions we ask. How does Parliament get into this loop? That's the question I'm asking. In a while I'm going to raise some specifics about a lot of money that, apparently, it's going cost, and it may cost even more, but could you answer that general question first?

º  (1605)  

    Ms. Sheila Fraser: One of the very important roles Parliament plays is through the committee hearings, when you bring in departments to look at issues with us and issue your reports. I do think that certainly focuses the minds of the civil servants on what they're doing with those programs. So I would encourage the committee to continue with as many hearings as you are able looking at the issues we try to bring before you.

    There's another issue we get at in our chapter on the new definition of accountability, the whole review by Parliament of documents like estimates and departmental performance reports. One of the issues we've been bringing up is that department performance reports are often lacking or incomplete, and departments tend to be very reluctant to publish information that doesn't show stellar performance. We'll see what happens with the new committee on estimates, but I think those are ways parliamentarians can have more influence on some of these issues, looking at performance reports, looking at estimates, and holding the hearings you do.

    Mr. Philip Mayfield: You've raised EI again too. You mention that there's a $40 billion surplus. That money, when it's collected, goes into the general fund. There's perhaps an $8.9 billion surplus in that fund, you have suggested, which means there's a lot of money that has been collected as EI premiums, but has been spent on other things. You're saying the premium is too high. Certainly, I agree with you. The finance minister has said it's come down 10¢. That comes out to $800-some million, which is a long way from the $4 billion surplus for EI this year. What, in your estimation, would the premium have to be to bring it down to a break-even point at $15 billion?

    Ms. Sheila Fraser: I'm afraid I can't answer that, because since the beginning of the program the government has collected $40 billion more in revenues than it has spent on benefits. The actuary has said that $15 billion would be necessary, but I don't think we can suddenly today bring the rate down to zero and then start spending just on benefits.

    Mr. Philip Mayfield: I appreciate that, but there's still a $4 billion surplus in that account this year.

    Ms. Sheila Fraser: That's right, and there are several things the government can do. One is to reduce the premium rates, another is to look again at the benefits. Those are policy decisions. The government have indicated that they're undertaking this analysis and are going to have public consultations. As we mentioned in a recent hearing on this, we haven't seen the analysis and we see no indication of public consultations, and I would urge them to move on this, because there's only a year left before those clauses that were suspended come back into effect and we're back to the rate-setting process we had before. So the government has to start moving on this if they're going to introduce any legislative changes.

    Mr. Philip Mayfield: I guess in the next round of questions I'd like to ask how Parliament can be involved in that, because Parliament again is left out of this loop.

    The Chair: Parliament can quite easily be involved if the government respects Parliament as an institution.

    Monsieur Descrochers.

[Translation]

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

    Ms. Fraser, you noted that there was a lack of transparency when it comes to the salaries of the heads of crown corporations. I asked you the question this morning, but I would like to do so again, since we are in front of the cameras.

    How many crown corporations were audited this time?

    Ms. Sheila Fraser: We audited 43 crown corporations over the past three years.

    Mr. Odina Desrochers: Could you name a few of them?

º  (1610)  

    Ms. Sheila Fraser: We audited those for which I am the Auditor General. There are several; there is even a list in the appendix at the end of our report. There is the Royal Canadian Mint, the Business Development Bank, the Farm Credit Corporation, the Canada Lands Company, Atomic Energy of Canada Limited, etc.

    Mr. Odina Desrochers: Ms. Fraser, what did you notice about the salaries? Are there major discrepancies between the various crown corporations?

    Ms. Sheila Fraser: We noticed there was a huge discrepancy in the salaries at crown corporations, except for presidents, who are appointed by the government and whose salary is established through a legislative process. For vice-presidents and other senior executives, the salary is usually established by the board of directors. We noted cases where senior executives earned more than the president. When we asked why that was so, we were told it was important to have experienced and competent people and that to do so, they had to be competitive with the private sector.

    We raised two questions and made two recommendations. First of all, there are salary levels that are acceptable in the private sector, but that will never be in the public sector, and we think it would be a good idea to provide more advice or information to boards of directors so that they can make the comparison between the public sector and the private sector and decide how to implement the public sector values in crown corporations.

    Our second recommendation was that crown corporations should disclose the salaries of their senior executives, as is the case for any Canadian publicly traded company.

    Mr. Odina Desrochers: Do you know what criteria are currently used to set the salaries? Are there such criteria, or is it simply up to the crown corporations' discretion?

    Ms. Sheila Fraser: The criteria are set by each of the corporations.

    Mr. Odina Desrochers: So you know there is a set of criteria for each crown corporation, which is why you are concerned about the process used to set the salaries.

    Ms. Sheila Fraser: There was a lot of discrepancy between the salaries. Obviously, you have to expect some: crown corporations are not all the same, be it because of the nature of their business, their size or the expertise they need. So you cannot have a one-size-fits-all approach, but we think it would be a good idea to provide more assistance and advice to boards of directors on the values of the public sector and on how to make the comparison with the private sector, because obviously, crown corporations do not all run the same risks as private companies do.

[English]

    The Chair: Merci Beaucoup, Monsieur Desrochers.

    Mr. Harb.

    Mr. Mac Harb (Ottawa Centre, Lib.): Thank you very much for your report. I had a chance to go, believe it or not, up to chapter 7, and I was quite impressed by the quality of your work and that of your staff. Also, I was amazed by the positive response the departments seemed to have given your report. In every one of the chapters not only do they seem to agree with your recommendations, but they seem to also be putting together an action plan to follow up on your recommendations. Are you encouraged by that?

    Ms. Sheila Fraser: Yes, very much. As you mentioned, with almost all the audits we tabled this year, the departments have indicated general agreement, and some of them have come forward as well with action plans or have actions under way. As is the case with our new status report, we will be taking them at their word, and we will be coming back in an appropriate period of time to see if these actions have actually been put in place. I'm hopeful that they will be and that we can report positive progress.

    Mr. Mac Harb: Thank you.

    There is one part, though, that is still alarming, not only to me, but I'm sure to my colleagues. And I'm sure the Treasury Board chair will be alarmed when she reads this part on page 13, chapter 5, your recommendation 5.43. In fact, yesterday I asked the President of the Treasury Board a question in the House on whether or not she is serious about implementing the full accrual accounting, as well as when that would take place. To my surprise, after reading the response of Treasury Board and hearing the response of the minister, there seemed to be a little inconsistency. The minister told the House yesterday that she's looking forward to working with the Auditor General very closely to come forward with an aggressive plan on that. So I'm sure I'm speaking on behalf of my colleagues in suggesting you put in a call to the minister to find out how you can work with her office to ensure that this is moving ahead. Certainly, the delay that seems to be proposed by the department here I don't think is acceptable. I don't think that's the will of the House or the will of the committee, and I'm not sure that is what you want to see.

º  (1615)  

    Ms. Sheila Fraser: In fact, you have raised one of our great frustrations.

    As for the implementation of accrual accounting, the government has made, I would think, reasonable progress, and we have talked about that and noted it in our public accounts. Many of the departments have gone to great efforts to calculate and to record the fixed capital assets they have and are estimating the liabilities. This issue touches on accrual budgeting and appropriations.

    We have noted here in this chapter all the hearings we've had and the reports from the committee encouraging the government to move forward on this. I must admit, I don't know why, but there is great reluctance to do so. We are being told very often that it is a very complex issue, but there are several provinces in this country that are doing this, B.C., Alberta, Manitoba, Quebec, and there may even be more. If others can do it, I'm sure there are very good and very bright people in the Treasury Board Secretariat who can think through a paper on this. So I would encourage the committee to once again have a hearing on this and try to move this issue forward.

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

    We'll take that point under advisement, Ms. Fraser, when the steering committee meets to discuss the issues and the priorities of the committee.

    Mr. Murphy.

    Mr. Shawn Murphy (Hillsborough, Lib.): Thank you very much, Mr. Chairman.

    Madam Fraser, I want to probe a little deeper into this whole issue of accountability in government and the role of Parliament with regard to accountability of line departments and crown agencies. You use the example of firearms control, which started out, I believe, in 1995. The original estimate was that the fees generated would be $117 million, the costs would be $119 million, and when you look at the figures today, you could say it's off the rails, but in fairness to the people who did this in 1995, they had no idea how many guns were out there, no idea of the reactions of the provinces, the public, and changes in policies and programs. But that's not the issue. The issue is accountability and what should have been done to provide better accountability. We don't review the estimates at this committee. You don't do an audit every year on each department, you don't have the resources or the staff. Are you making a recommendation, or could you give us guidance or wisdom, as to how this committee could better fulfil its function on the whole role of accountability? And use this as an example, because I take it the costs have increased every year above and beyond what they originally said they would be. Should they have come back to government, should they have filed a special report to Parliament to tweak this, or should they have said nothing? I'm a little bit at sea on this issue, and if you could just give us your thoughts, I'd appreciate it.

    Ms. Sheila Fraser: I will start, and I'll ask my colleague Dr. McRoberts to help me on this.

    I see a couple of issues even within the current accountability framework of government and Parliament. One is that this project was classified as a major crown project, and with that comes a series of reporting requirements on the departments. They're supposed to report the cost to date, the estimated cost to complete, the program difficulties, and all the rest of it. When you look at the departmental performance reports and the information given in there, for many years there was no financial information at all. I think everybody recognizes that there were difficulties, and some of the costs are understandable, because of the issues they had to deal with, but there is no discussion of that at all. In fact, it was almost tragic. They talked about growing pains. Well, I think this is more than growing pains, quite frankly. I would have expected, as a minimum, a departmental performance report to have given a much clearer picture each year of where they were at in the implementation, the difficulties they were facing, and the changes to the cost estimates and what they thought it was going to be.

    The other area is with the estimates and the supplementary estimates. These are coming through yearly and aren't getting a lot of attention, but there's very little detail in there as to what this is for. If they had provided more information on the costs and what was happening, I think it would have helped to inform Parliamentarians and Canadians better too.

    I don't know, Hugh, if you want to add anything more on that.

º  (1620)  

    Mr. Hugh McRoberts: I think the Auditor General has pretty much covered it. I think the key thing is that had the reporting required by the government's own rules taken place, the major crown project reporting would have provided in the appropriate estimates document an annual opportunity at least for Parliament and the justice committee to perform the oversight role, ask the appropriate questions, and hopefully, get the appropriate answers.

    Mr. Shawn Murphy: You can appreciate that a member of Parliament doesn't have the resources or the skills to go over every estimate in every department, but it should have been in the major crown projects reporting and it wasn't there, that's what you're saying.

    Ms. Sheila Fraser: That's right.

    Mr. Shawn Murphy: Thank you very much.

    The Chair: Thank you, Mr. Murphy.

    Monsieur Godin.

[Translation]

    Mr. Yvon Godin (Acadie—Bathurst, NDP): Thank you, Mr. Chairman and thank you, Ms. Fraser, and your team.

    Ms. Fraser, the first question I would like to ask you is the following: what authority do you have to make recommendations on employment insurance premiums? You say the government is on the brink of acting illegally when it comes to employment insurance. What authority do you have to make a recommendation one way or the other?

    Ms. Sheila Fraser: My role, Mr. Chairman, is really to see whether parliamentary authority is being respected. When I read the Employment Insurance Act, my interpretation is that when it was implemented, the parliamentarians wanted to the program to become self-funding over a certain period of time. But given the accumulated surplus, I wonder whether the spirit of the act is being maintained. I certainly have no authority to make a specific recommendation on the rate, the level of benefits paid or any other such matter. In fact, I can only look at the revenues and the benefits being paid and see whether they are consistent with the legislative framework passed by Parliament.

    Mr. Yvon Godin: I am not asking the question because of the recommendation you make when you say there is $40 billion in the employment insurance account, when only $15 billion is required. There is indeed an excess of $25 billion. I think that even $10 billion rather than $15 billion would suffice, so the employment insurance fund currently has an excess of 25 to $30 billion.

    The government has not explained why it needed such a huge surplus for employment insurance. I think you are aware of the fact that the Prime Minister himself told the House of Commons what he had done with the money. I think what the government did is fairly clear. He explained why he needed that money.

    I do not agree with him, but when I asked my first question on that topic in the House of Commons, the Speaker interrupted me because I had said the government had stolen money that belongs to the workers. Apparently that is unparliamentary.

    I think this is the second time in your report that there is reference to premiums and not benefits. Perhaps your predecessor had spoken enough about that. When the Human Resources Development Minister talks about employment insurance, she says that 85 per cent of those entitled to it get benefits. That is to be expected: it should be 100 per cent. What she doesn't say is that only 40 per cent of people who pay premiums are entitled to employment insurance benefits. That is the problem.

    In your audit, would you be able to find the figures that confirm that only 40 per cent of those who pay employment insurance premiums are entitled to benefits? The problem isn't really the premiums, it is that people are not eligible. Sixty per cent of people are not eligible to a program that is their own, one that does not belong to the government.

º  (1625)  

    Ms. Sheila Fraser: The problem raised in Mr. Godin's question, Mr. Chairman, is that in the past, the act specified how the rate should be calculated. So I could check whether there had been any breach when calculating the rate, but the act does not specify how the benefit should be established nor which programs should be funded. That is not up to me to decide. So I must see whether overall, over a certain period of time, the revenues equal program expenditures. But it is really up to the government and parliamentarians to decide how the program should work. It is not up to me to do so.

    Mr. Yvon Godin: In your audit, are you able to see, for example, whether all the expenditures on employees in the employment insurance program came from the employment insurance fund? Is it possible to see whether senior bureaucrats got bonuses for their management of the employment management program, and whether they might be encouraged to cut benefits to Canadians, even if that means being taken to court? Win or lose; we will sort it out later. Most of the time, they lose. It is fairly complicated. Lawyers do not really have a great interest in it because the cases might involve poor people who lost their job and want to collect $3,000, but the legal fees will be $5,000.

    It is really a system the government has taken over. It is making surpluses and balancing its budgets on the back of society's most vulnerable, those who lost their job and who are the last to be able to fight for a system which, in reality, belongs to them.

    Ms. Sheila Fraser: Mr. Chairman, we do plan to audit the program in 2003 or 2004. I will be pleased to take Mr. Godin's concerns into account during our audit.

    Mr. Yvon Godin: Do I still have some time?

[English]

    The Chair: Since you're the first member of your party to speak, you actually get eight minutes, so you have another two and a half minutes.

[Translation]

    Mr. Yvon Godin: I could also send you a letter from the Employment Insurance Branch at the Human Resources Development Department in which employees working on quota were told they had not generated enough money by identifying false claims and that if the profit targets were not reached on a national level, 150 jobs would have to be cut.

    Madam Auditor General, I want to emphasize that the problem is due to the fact that the government depends more on employment insurance than do the employees who lost their job. That is one comment I wanted to make.

    You spoke about the sums of money spent on firearms registration. When the Public Accounts Committee reviewed that, Parliament had authorized $2 million. We have now reached $1 billion. In your view, has the act been breached or is there nothing we can do, even though an extra $800 million has been spent?

    Ms. Sheila Fraser: Indeed, Mr. Chairman, the funds that were used or spent were duly authorized by Parliament. In my view, there is nothing illegal. The measures fall within the act because the funds were voted by Parliament, in the main estimates or the supplementary estimates. It is quite a cost overrun, but there is nothing illegal about that.

º  (1630)  

    Mr. Yvon Godin: But there were two cases; we're not talking about something that happened yesterday. The supplementary estimates come to us as a surprise today. It seems to me that Parliament could have been informed of this in the past two years.

    Ms. Sheila Fraser: I fully agree with you that Parliament should have been warned, that it should have known what stage the program had reached, what the cost estimates were and what problems were being encountered with implementing the system, but the expenditures were indeed authorized each time by Parliament. In fact, my understanding is that there will be even more funds in another supplementary estimate that will be tabled or that is currently under discussion.

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

[English]

    Mr. Forseth, you have four minutes.

    Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance): Thank you very much.

    Thank you for your report today. I'm looking at chapter 9, “Modernizing Accountability in the Public Sector”, under the section “Strengthening Parliament's role”. You say in paragraph 9.75, in part:

Key questions committees should consider with the plans and the performance reports include the following. Are the objectives and the costs of the program reasonably and clearly described? Has the program delivered the planned benefits to Canadians? Has the program's contribution to the results achieved been well explained? Could the program be delivered more efficiently? Could the benefits be delivered in a more cost-effective manner? Are the documents useful for the committee's policy and legislative agenda?

We have main estimates and then supplemental estimates, and I notice that even your office now is asking for quite a few more million dollars in the supplemental estimates, and yet those documents really don't explain what it's all about. So maybe you could help us by explaining why you're asking for more millions of dollars in your office and use that as a case example of how perhaps you're often frustrated, and everyone else is, when you look at these documents. They really don't tell us what's going on and explain the rationale of why more money's being asked for in the supplementary estimates that wasn't properly planned for or wasn't foreseen in the main estimates.

    Ms. Sheila Fraser: I'd be glad to talk about our process.

    As you may recall, about a year and a half ago we came before the committee to say we needed additional funding for the office, and we asked for a 15% increase in our base. We obtained $6 million for the year ending 2002 and $8 million for the year ending 2003. At the same time we agreed with the Treasury Board Secretariat that we would review the funding mechanism for the office, because at the current time we have to go to the Treasury Board and have our requests analysed, as with any other department, and this could put us potentially into a difficult situation with the Treasury Board. That analysis and that process, like many other processes in government, has not gone as quickly as one would like and we have not resolved that funding mechanism. So in order to get the continuation of that increase in our budget, we have to go back through supplementary estimates. As well, we have just recently settled new contract negotiations with our professionals and our audit services group, and any increase to salaries has to go through the supplementary estimate process. There's a whole series of things like that. Another example is that we had to move our Montreal office. Public Works came to us and said they needed the space, so we had to move. We're going back to supplementary estimates to ask for the costs of that move, which were not foreseen.

    The difficulty is that when the main estimates come in, there are often things we know are going to happen, for instance, increases in salaries--we knew we were going to have an increase in salaries, because we were in contract negotiations--but can't put in as main estimates. They have to go through the supplementary estimates only when the contract is signed. However, in our performance report we have tried to indicate more clearly what are our main estimates, but what are the real expenses we think we're going to have because of these things we know are going to happen to us. Perhaps we could get into more of a discussion when we do a hearing on our performance report and our departmental plans and priorities.

    Mr. Paul Forseth: What I was trying to say was, use that as a case example of how the documents themselves are not descriptive enough.

    Ms. Sheila Fraser: They're very difficult, because the main estimates are only the moneys that have actually been voted, even though departments may know they are going to incur additional costs through things even as simple as contract settlements. Unless the contract is actually settled and the funds voted, you can't include that. It's a difficult process.

º  (1635)  

    Mr. Paul Forseth: Just for the record, your main estimates are how much, and how much in the supplemental, approximately?

    Ms. Sheila Fraser: Our main estimates are about $55 million, and I think the supplemental was $8 million or more, but I'm not sure, I may be wrong on that. I can provide that to you, if you would like.

    Mr. Paul Forseth: They're in the documents. Thank you.

    The Chair: Thank you, Mr. Forseth.

    Mr. Shepherd, please, four minutes.

    Mr. Alex Shepherd (Durham, Lib.): Thank you.

    I'm just trying to get through your words on the firearms issue and the basis of approval for funding. You talk here about an activity-based cost framework that was supposed to be undertaken by the department. You further indicate that there was an effort on behalf of the justice department to hire two consultants, senior financial analysts, at a cost of $560,000. What did we get for $560,000?

    Ms. Sheila Fraser: I'd like to ask Dr. McRoberts to answer that question.

    Mr. Hugh McRoberts: We're not sure what the department got for that. We were aware that they had spent that, and that was part of the reason we expected them to be able to prepare the information in that format. We were told that between the time those people completed their work and the time for the information we were requesting there had been yet another change in accounting basis, so that they were unable to reflect the results of that work in the information they provided to us.

    Mr. Alex Shepherd: In your audit did you determine on what basis the government approved the expenditures in the first place?

    Mr. Hugh McRoberts: Yes, we did. There was a set of accounts prepared that were used in getting the initial program submissions to the government, which were activity-based costs, and there were some submissions in the early years of the program reporting results on that basis.

    Mr. Alex Shepherd: You refer to the fact that you stopped your audit because, basically, information was unavailable. In the reports we hear that it's $1 billion today. What assurance do you have that this figure is anywhere close to reality?

    Ms. Sheila Fraser: We are unable to provide any assurance on that number. That is the estimate prepared by the department, but we have not audited it. We are not able to give any assurance that the costs presented in this report today are complete either.

    Mr. Alex Shepherd: So there's some question whether in fact we've reached our maximum limit on this program in the first place.

    Ms. Sheila Fraser: That is correct.

    Mr. Alex Shepherd: Okay.

    I'd like to jump into another area, the Space Agency. You talk about them hiring intermediate term employees without any kind of concept of why they need them. Is that a fair statement?

    Ms. Sheila Fraser: Partly, I guess. They have a budget of about $300 million a year, but there are prior commitments for very large programs, for example, the International Space Station, which are of very high risk and can be a very significant cost to them. And there is a possibility that the International Space Station could represent one-third of their budget, which leaves very little room for them to conduct the other activities they're supposed to be carrying out and the objectives they're supposed to have under the Canada space program. The agency was considering converting certain contractors and term employees into permanent workforce. We felt this was too soon, that they needed to go back, review their strategic plan, and determine what projects they could realistically undertake before they increased their permanent workforce and had a fixed cost that will go out over several years. So they need to go back and really decide what projects they're going to get into, what funding levels they need, what funding levels they will get, before they convert these people into permanent employees.

º  (1640)  

    Mr. Alex Shepherd: If I can paraphrase what you're saying, we have an iindeterminable amount of income coming in because of the nature of the programs it's backing, and yet we're turning around and making long-term commitments to our employees.

    Ms. Sheila Fraser: That's correct.

    The Chair: Mr. Bryden.

    Mr. John Bryden (Ancaster—Dundas—Flamborough—Aldershot, Lib.): In chapter 9 you talk about partners in accountability. Is the minister a partner in accountability with respect to his own department?

    Ms. Sheila Fraser: The minister, as everyone knows, is the person who is accountable to Parliament and responsible for the activities of his department.

    Mr. John Bryden: In 10.88 you observe that you requested information from the Department of Justice on the firearms program, the information didn't even meet the reporting framework it was supposed to meet, and you ceased your audit. In other words, the information was so flawed that it wasn't even useful to you. How can a minister, not Parliament, be a partner in accountability when the data being produced in his department on a program are so inadequate?

    Ms. Sheila Fraser: The financial information is managed year to year, and the difficulty we had here was the accumulation of costs over a period of time. The department also was to be the point of accountability for the whole program, which involved other departments, and should have been aware of the costs incurred by other departments, notably the RCMP and Corrections Canada. They didn't get that information from them. And people and systems changed several times over this process, so it became almost a futile exercise to try to get this information in the proper form, though one would expect that they should have done it from the very beginning. It's not excusable that we couldn't get it, but at the end of the day, we said, it's really not our role, as auditors, to go back in and try to assemble this information, the department should be doing it. And after much effort they decided they couldn't get it, and we ceased the audit, because we realized that we were not going to get to a satisfactory conclusion.

    Mr. John Bryden: To me, the accountability question isn't just reporting to Parliament, it's whether the minister knew there was a problem, or whether the minister even had an opportunity to know. If the minister did not have an opportunity to know, is there anything the minister can do to proactively make sure his officials report a situation like this?

    Ms. Sheila Fraser: This is a really excellent question. We see at times officials in departments who are reluctant to give news that may be considered bad news further up the line of command with the hierarchy in departments. I don't know that this is one of those cases. You would have to ask the minister what he knew or did not know, but we have seen other cases where deputy ministers or ministers were assured that things were all right and they weren't. It is troublesome.

    Mr. John Bryden: In this particular case can we also ask the question of the deputy minister? With the information that was available up the hierarchy, did the deputy minister have a reasonable chance of knowing his program was experiencing tremendous annual cost overruns?

    Ms. Sheila Fraser: I'm afraid I can't answer that question, but I think, if the committee had a hearing, it would be an excellent question to put to the department.

    Mr. John Bryden: On another theme, I notice that in chapter 6 you say Health Canada's national surveillance systems on communicable and chronic diseases cannot ensure the accuracy of their data. I wonder, in the context of the bioterrorism threat and that kind of thing, whether this is, in fact, a national security issue and we should be giving it particular attention.

    Ms. Sheila Fraser: I'll ask Dr. Barrados to answer that question.

º  (1645)  

    Ms. Maria Barrados (Assistant Auditor General, Office of the Auditor General ): Yes, it is potentially a question of national security, and it is part of a piece of work our office is undertaking on national security issues.

    Mr. John Bryden: Thank you, Mr. Chair.

    The Chair: Thank you Mr. Bryden.

    Mr. Keddy. We'll give you five minutes, because you just came in at the end here.

    Mr. Gerald Keddy (South Shore, PC): I apologize for being late. Too often we end up with two or three meetings at the same time, and I was definitely there all morning.

    You mentioned in chapter 2 the Navigable Waters Protection Act. That's one I see as being relatively easy to implement some changes in to really make an effort to protect our water systems, particularly fresh waterways, the upper end of the St. Lawrence and the Great Lakes. Did you look at that part of navigable waters, the whole series of laws and regulations surrounding dumping bilge water, taking on water, leaving off ballast?

    Ms. Sheila Fraser: We haven't looked at it specifically in this audit. My colleague the Commissioner of the Environment and Sustainable Development did look at that issue when she released her report on invasive species, the whole question of mussels, which she raised in the report as being a very serious concern, even an economic concern, to the country. She did raise the question, I believe, of--

    Mr. Gerald Keddy: I asked her the same question. We're not talking about expensive retrofitting for international tankers or Great Lakes boats or grain boats or oil boats or ships, or any of them. You're talking a $100,000 to $250,000 retrofit that simply processes all the water that comes on mechanically, in a centrifuge or something like that, and then uses microwave or electrical heating or some process to make sure any organisms in it are killed. The water you take on and the water you put out is simply treated, and it's treated by mechanical process. That's not chemical, it's not invasive, it's not anything that costs a lot of money, and for the life of me, I can't wrap my head around why the government hasn't dealt with it in a meaningful fashion.

    Ms. Sheila Fraser: I think Ms. Phinney mentioned earlier that these committee hearings are always interesting because we learn something new. I've just learned something new too. I think it would be really interesting to ask those kinds of questions to the department, should you have a hearing, if it is not that expensive or difficult to do. And the commissioner, I know, raises this as quite a serious problem in our waterways.

    Mr. Gerald Keddy: This morning we spent a great deal of time on chapter 10, mainly, I think, because of the issue and the huge expenditure that's there. I have a real difficulty with not relying on the main estimates. You mentioned in your report that the government, for 90% of their expenditures, follow the main estimates. With the gun registry, 30% of their expenditure comes from the main estimates, 70% from supplementary estimates. My question to you would concern the legality of that. Constitutionally or legally, does the government actually have the right to bypass Parliament? Maybe I'm asking you a question you can't answer.

    Ms. Sheila Fraser: I don't believe that there is anything illegal, and of course, supplementary estimates are voted by Parliament. So Parliament did authorize those expenditures.

    Mr. Gerald Keddy: But supplementary estimates come in dribs and drabs, right?

    Ms. Sheila Fraser: An interesting question to look at would be how much attention and scrutiny they get and what kind of explanations are given to parliamentarians in the process of approving them.

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    The Chair: Thank you very much.

    Ms. Meredith, you wanted a couple of questions.

    Ms. Val Meredith: We dealt with chapter 10 on the firearms legislation, but chapter 11 points out that in doing an audit, you found that the firearms interest police database is inaccurate or has information in it that isn't pertinent. Can you comment on that briefly?

    Ms. Sheila Fraser: We refer to studies and reviews that were conducted by the RCMP. The RCMP contributes about one million of the four million who are in this database, and they have raised many concerns about the accuracy and the quality of the database. This is a database of individuals who have had contact with the police, not necessarily people who have been charged with any crime. If you've have contact with the police and they think you might be somewhat suspicious or they have concerns, your name will be put into this database. The issue is known. They've done limited reviews, and we think it's time that they really take this seriously, do a complete review of the quality of the data in there, and develop a better framework to say what information should go in nor not go in.

    Ms. Val Meredith: Did they have any framework for the names being put into this database, or were they just arbitrarily picking and choosing names they felt they wanted in there?

    Ms. Sheila Fraser: To my knowledge, there was no specific framework. If an individual policeman or the police forces had contact with someone they believed was suspicious, they would include that information. Of course, that information is used to flag a concern when people are applying for a firearms licence.

    Ms. Val Meredith: Thank you.

    The Chair: Mr. Mayfield.

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

    I've taken a cut at it. Mr. Murphy's gone at it, and I'm going to come back to it again. I want to preface it with a little story, though. There was a logging contractor who had a pretty good sized boom of logs in the water, and it was night, it was raining hard, the wind was starting to rise, and the water was starting to rise as well. So he spoke to his foreman and he said, I'd like you to go and check that boom and be sure it's safe, properly tied. The foreman said, sir, it is tied, it is safe, I guarantee it. The contractor said to him, I'll tell you what, you write me a cheque and have it certified for three-quarters of a million dollars and I'll accept your guarantee. Otherwise, go and look at it, please.

    With this issue of the firearms, as I read your report, I see costs rising in a way no one could really imagine, and those costs don't include other costs, of gun owners, of provinces, so it's even more than we realize. What really concerns me, though, is that the audit was stopped. I can only presume that the books were in such a mess. How much worse do you have to go before you say it's worth spending more money to find out how much worse it is? I'd like to know who's responsible for that. I would like to know if anyone can be held personally responsible for that kind of mess. We've heard the minister say, I'm personally responsible. The department's in it. Treasury Board's in it. But there has to be someone who knew it wasn't being done properly. Who's responsible, and how can they be held accountable?

    Ms. Sheila Fraser: I'd just like to clarify. When we were trying to do this audit, we wanted to give an assurance on the completeness and the accuracy of the costs, and because of the issues Mr. Mayfield has raised, it became obvious fairly quickly that we would not be able to do that. We do not believe it was our job to go out to the provinces and everybody else to try to find out what the costs were over a long period of time. That's why we stopped the audit, because we realized that even putting more effort into this, we were not going to be able to give any assurance as to the completeness of the cost figures.

    As to who is responsible, I would suggest that there be a hearing on this, that you ask the question of the department, and that they respond to your question on that issue.

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

    Ms. Phinney.

    Ms. Beth Phinney: This is not my question, but has the Auditor General told us which areas she thinks we should study first? Have you given your opinion on that?

    Ms. Sheila Fraser: I would prefer that the committee determine that. I think all of these issues are important.

    Ms. Beth Phinney: Okay, we'll double our meetings.

    We don't have time, as individual members or as committee members, to study all the estimates, to study all the regulations, to look afterwards to see what was spent etc. Are we doing the right thing? We've set up a new estimates committee, and that's all they're going to look at, estimates, I think. Each committee is supposed to do its own estimates. That's the last thing anybody wants to do, and they sort of give it half a committee meeting sometime before the deadline. Should we be looking at the estimates with two or three meetings? And we never look at regulations. There may be a committee in the House, but Finance, for example, comes out with regulations like this every year, and nobody looks through those. Is there some way we could be improving what we're doing in the House of Commons to keep track of what's going on-- to have any idea of what's going on?

    Ms. Sheila Fraser: You raise an excellent question. The estimates are really important, and the review of them is a fundamental role of parliamentarians. I do believe the new Standing Committee on Government Operations and Estimates is looking at the whole question of how to do this more effectively and more efficiently, and I would encourage you to talk to Mr. Alcock.

    Ms. Beth Phinney: What about things that are done through regulations, where we don't even know if they ever happen?

    The Chair: There is a joint House of Commons-Senate Committee on the scrutiny of regulations that perhaps should get more visibility than it actually does. I know that's an issue the members of the committee have felt. Government by regulation is something that tends to slip down through the cracks.

    We're going to have a tiny question from Mr. Keddy.

    Mr. Gerald Keddy: Thank you Mr. Chair.

    Under the Special Import Measures Act--and we talked a little bit about it this morning--there's the turnaround time for Canadian producers of any commodity to react to dumping from foreign companies or countervail from foreign companies. You talk about the problem with dumping, but you don't tell us how long the turnaround time is. Obviously, it wasn't quick enough to deal with the issue of garlic, which was the example you used, and I'm sure there are lots of other examples, such as tomatoes or other products coming into Canada--I'm just using farm products now. How quickly does a producer have to react to dumping allegations or charges?

    Ms. Sheila Fraser: I'll ask Mr. Timmins to respond.

    Mr. Douglas Timmins: I don't have off hand the exact number of months or whatever, but I am aware of examples where it certainly is a number of months. Further to our discussion this morning, I don't believe the circumstances are significantly different between Canada and the United States in respect of the time. This audit was not looking at the specific process, because the subcommittees had looked at that and recommended that the process be maintained as it was.

    The Chair: I have two quick questions, Madam Fraser, one regarding Fisheries and Oceans, chapter two. You mentioned the two information systems serving the same purpose, one developed on the east coast and one developed on the west coast, over quite a number of years, 10 or 15 years, I believe. Your concern is that:

This case study illustrates the consequences of a lack of national leadership in developing important information systems. Both regions used poor project management practices and, in the end, the Department has paid for two systems where only one national system is required.

We had the coast guard before this committee back in the spring time, and they were complaining about the fact that ships had to be tied up for two months out of the year because there was no budget to keep them out there doing the work a coast guard needs to do, especially now we're in this world of terrorism. Now we find that they weren't even aware that they were developing two parallel systems, one on the east coast and one on the west coast. What does this say about the management there?

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    Ms. Sheila Fraser: We raised the concern that there isn't a national management, if you will, or national policies and procedures. Much of the management is at the regional level, and the regional directors general can reallocate funds that are initially targeted to the coast guard for other activities and, I presume, vice versa. So the day-to-day operational management is in the regions, and there is a lack of a national policy-setting program, and in fact, it is as if we have five coast guards rather than one. So we believe there is room for increased efficiency and there needs to be a stronger national presence in the coast guard.

    The Chair: My second question has to do with this database of the RCMP you pointed out. You say “persons are known to be in the database who should not be, and thus could be denied firearms licences or have their eligibility reviewed”. It seems to be, if I understand what was said today, that if a member of the RCMP or a police force just gets a bad feeling when they interview you or stop you in the street or on the highway, your name could end up in this database. Is that correct?

    Ms. Sheila Fraser: It is our understanding that your name can be put into the database simply through contact with the policeman. You do not have to be charged or convicted of anything. It's a database that contains information on citizens.

    The Chair: In this day and age, when our Charter of Rights and Freedoms is so protective of these kinds of freedoms, how on earth is our police force collecting names and putting them into a database with no justification other than a whim?

    Ms. Sheila Fraser: I think that would be an excellent question for the RCMP, Mr. Chair.

    The Chair: On that note, Madam Fraser, do you have any closing comments before we wrap up the meeting?

    Ms. Sheila Fraser: No, Mr. Chair. I'd like to thank the committee for its interest in the report, and I look forward to future hearings on the issues we've raised.

    The Chair: Okay. Thank you, all.

    The meeting is adjourned.