MAY 2003

 

 

GOVERNMENT RESPONSE TO THE REPORT

OF THE STANDING COMMITTEE ON PUBLIC ACCOUNTS

THIRD REPORT - PARC DOWNSVIEW PARK INC. –

 PARLIAMENTARY CONTROL OF PROGRAMS AND SPENDING

 

 

On December 3^rd, 2002, the Standing Committee on Public Accounts tabled its Third Report following its consideration of Chapter 13 (Other Audit Observations – Parc Downsview Park Inc.- Parliamentary Control of Programs and Spending) of the December 2001 Report of the Auditor General of Canada.

 

The Government appreciates the time and effort spent by Committee members in their review of the Auditor General’s December 2001 Report on Parc Downsview Park Inc. (PDP), and thanks the Committee for its report.

 

Parliament has formally granted authority to the executive to take certain actions, and when the executive can accomplish an objective within the authority granted by Parliament, it is legitimate for the executive to use the flexibility provided by Parliament.  In the case of PDP, Parliament has granted the Government fairly broad authority to lease or transfer lands under the Federal Real Property and Immovables Act (FRPIA), and it has also set-up a legislative framework for the governance and oversight of Crown corporations under Part X of the Financial Administrative Act (FAA).   It is in the context of both the FRPIA and the FAA that the Government decided to transfer/lease lands for the establishment of a park and concluded that the CLC had a sufficiently wide mandate to establish a subsidiary corporation with the mandate eventually given to PDP to manage and develop the park.  The Auditor General’s Report itself reflects that the Government met all applicable administrative and legal requirements in establishing PDP.

 

Part X of the FAA also provides for a number of opportunities for Parliament to exercise its oversight by ensuring that Corporate Plan summaries and Annual Reports of Crown Corporations are tabled in Parliament.   Canada Lands is responsible for tabling its Corporate Plan summaries and Annual Reports to Parliament that include information from it’s wholly-owned subsidiaries.

 

The Government of Canada has considered carefully the Report of the Standing Committee, including its five recommendations.  It is pleased to provide the Committee with the following response that the reports on past and current activities of PDP.

 

GOVERNMENT RESPONSE TO STANDING COMMITTEE RECOMMENDATIONS

 

The above represents a review of the governance and parliamentary control and oversight mechanisms in place for Crown corporations in order to provide context to the Government’s response to the Standing Committee’s recommendations below.

 

Recommendation 1

That the Privy Council Office seek to obtain parliamentary approval to make Parc Downsview Park Inc. a parent Crown corporation, prior to March 31, 2003.

 

As stated by the Auditor General and noted in the Committee’s report, Parc Downsview Park Inc. (PDP) was established in accordance with the relevant governing legislation, principally the Financial Administration Act (FAA).

 

The structure that was put in place was designed to fulfil the Government’s commitment made in Parliament in the 1994 budget that “...the existing DND - owned lands associated with the Downsview site will be held in perpetuity and in trust primarily as a unique urban recreational green space for the enjoyment of future generations.”

 

The financial accountability for Crown corporations provided in Part X of the FAA provides a rigorous means to ensure proper transparency and accountability of PDP Inc., through its parent Crown corporation.

 

Recommendation 2

That the Privy Council Office, in conjunction with Treasury Board Secretariat and the Department of National Defence, correct the issue regarding the $2 million in development expenditures paid out to Parc Downsview Park Inc. and charged against the Department of National Defence Vote 1 of its 1999-2000 Estimates.  That the Privy Council inform the Committee when a resolution has been reached and the manner in which it will be resolved.

 

In the December 2001 Report, the Auditor General expressed concern pertaining to the use of DND Vote 1 (Operations and Maintenance) funds for park development.  Following the Auditor General’s observations, DND recognized that some irregularities had occurred and took immediate steps to ensure that
Vote 1 funds are spent appropriately.

 

DND also undertook a complete review of all past transactions with PDP and discovered that there had been other payments and revenues accrued to PDP through inappropriate mechanisms.  The Government is taking appropriate action to redress these irregularities.

 

Recommendation 3

That henceforth, when the Government decides to implement initiatives (such as the creation of Crown corporations) that involve the spending of substantial sums of public monies, that it ensures these proposals obtain clear and explicit Parliamentary approval prior to the execution of the initiative.

 

Parliament has provided a wide range of options to develop organizational structures needed to achieve public policy outcomes.  In some instances, such as the creation of a new stand alone Crown corporation, legislation is required as provided for in the FAA.  In other cases, there may be other options available; which are not legislatively based, such as the privatization of certain functions through entities established through the Canada Business Corporations Act.

 

It is important that the solution fit the need and that flexibility is maintained so that this principle can be respected.  However, whatever solutions are found, they always have been, and always will continue to be, developed within the legal framework established by Parliament.

 

Recommendation 4

That Parc Downsview Park Inc. disclose the total cost related to ongoing DND activities in Downsview Park, including its site management activities, decommissioning activities and other related costs.  That Parc Downsview Park Inc. table the document with Parliament and the Public Accounts Committee no later than March 31, 2003.

 

Further to SCOPA’s hearing on June 04, 2002, a letter dated 12 August 2002 (attached letter), was sent from PDP CEO (interim) Mr. Tony Genco to the Clerk of SCOPA, providing the information regarding the amount of money that DND has transferred to PDP from 1999/2000 to 2001/2002.  

 

DND still has ongoing requirements for a portion of the site.  This affects three distinct areas comprising approximately 50 out of 640 acres of land and includes eight buildings (two of which are new).  DND also has a continuing requirement for 216 residential housing units.

 

Since 2000/2001, there is a maintenance contract in place between DND and PDP, and the fees billed to DND include fees for the care and maintenance of buildings still in use by DND and for general site operations and maintenance including grass cutting, snow removal and municipal services distribution systems.   The maintenance contract also includes fees related to the operating costs and the costs of maintenance and repairs for buildings and parts of buildings that are unoccupied, and therefore, still a DND responsibility.

 

For fiscal year 2002/2003, DND projects that it will pay between $2.2M and $2.6M to PDP.  These costs are expected to be substantially less in future fiscal years

 

Recommendation 5

That the Auditor General of Canada continue to advise Parliament and the Public Accounts Committee on Parc Downsview Park Inc. or any other similar programs at the discretion of the Auditor General.

 

The Government wishes to recognize that the work of the OAG contributes to the well-being and is in the best interest of all Canadians.  In response to this issue raised by the Committee, it is herein recognized that this recommendation is within the purview of the AG to answer directly to Parliament.