:
Thank you, Madam Chair.
I am very pleased to be here to present my November 2006 report, tabled last week.
I am accompanied by Doug Timmins, Hugh McRoberts, and Ronnie Campbell, Assistant Auditors General.
[English]
This report covers a broad array of government activities, from the government system for managing spending, to public service ethics, to contract management, to programs that contribute to the health and well-being of Canadians.
The report includes four audits we had planned to report last spring. Because of changes to the parliamentary calendar as a result of the federal election, we deferred reporting them until now, with an update of our audit findings.
Let me begin with how the federal government makes decisions about spending public funds. The expenditure management system is at the heart of government operations because every government activity involves spending. Over the last six years, federal spending has grown from $162 billion a year to $209 billion. An effective system to manage spending is essential to getting the results the government wants and to being accountable to Canadians for what is done on their behalf.
We found that the current system does not routinely challenge ongoing programs to determine whether they are still relevant, efficient, and effective. I am concerned that the system focuses on challenging new spending proposals and pays too little attention to ongoing spending. Also, in many cases the distribution of funding is not aligned with what is needed to deliver the program.
Finally, we found that departments rely more and more on supplementary estimates to get funding for some items, instead of including them in the main estimates. This means Parliament does not see the full range of proposed spending when it approves the annual spending plans.
[Translation]
The government is reviewing the expenditure management system, and I encourage it to resolve the weaknesses we have identified. Good systems in themselves are not enough—they must be applied correctly and ethically. Departments and agencies can take several formal or measures to ensure proper conduct.
In chapter 4, we examined key aspects of these measures in the RCMP, Correctional Service Canada, and the Canada Border Services Agency.
We found that these public safety agencies have ethics programs but that many employees are not aware of them. Also, only about half of the employees believe their organizations would act on reports of misconduct, and many do not think those who report misconduct in the workplace are generally respected.
It takes more than formal programs alone to encourage employees to report wrongdoing by colleagues. Employees have to be confident that management would take action on reports of wrongdoing.
[English]
Heads of agencies in particular should demonstrate the highest ethical standards of integrity. When they fail to do so, public trust and confidence in government suffer. In chapter 11, unfortunately, we do report one case of unethical behaviour by a senior official, the former correctional investigator.
The behaviour we observed on the part of the former correctional investigator and the fact that it persisted over a long period of time and was not reported are extremely disturbing.
This kind of conduct is certainly not typical of the public service, and I would caution all not to generalize from isolated examples to the public service as a whole. In my experience, the majority of public servants do adhere to the high standards expected of them.
[Translation]
In chapter 9, we looked at the problems related to the RCMP pension and insurance plans.
These problems came to light only after employees complained. We found that the RCMP responded adequately to an investigation of abuse and waste, but we also found that broader issues remain. The RCMP needs to find a way to ensure that investigations of its actions are—and they seem to be—independent and unbiased. It also needs to assess the impact of a recent court decision on cases that warrant disciplinary action.
In chapter 3, we note that the federal government still has problems managing large information technology projects. These projects involve a lot of money, and it is important that the rules and processes in place for managing them be rigorously followed.
In the last three years, the federal government has approved funding of $8.7 billion for new business projects with significant use of IT.
[English]
Although a framework of best practices for managing large IT projects has existed since 1998, we found several of the same problems that we have reported in the past. Only two of the seven large IT projects we examined met all the criteria for well-managed projects. The persistence of these longstanding problems is extremely troubling, not only because they involve large public investments but also because of lost opportunities to improve business practices and services to Canadians.
This report also includes two chapters on major contracts that had serious shortcomings in the way they were awarded and how they were managed.
In chapter 5, we looked at the handling of two contracts to relocate members of the Canadian Forces, the RCMP, and the federal public service. In 2005, the program handled the relocation of 15,000 employees, at a cost of about $272 million. Government contracts should be awarded through a process that is fair, equitable, and transparent. We found that these contracts were not, despite various warning signs. The requests for proposals contained incorrect information, which gave an unfair advantage to the bidder who had the previous contract. The management of these contracts also had serious shortcomings, and members of the Canadians Forces had been overcharged for services provided to them.
In chapter 10, we found that the government failed to respect basic requirements in awarding and managing a major health benefits contract. This contract, worth millions of dollars, was awarded even though Public Works and Government Services Canada did not ensure that all the mandatory requirements were met. And for the next seven years, Health Canada managed the contract without respecting basic financial controls.
I am encouraged to see that the contract management issues in Health Canada have since been corrected.
[Translation]
We also looked at how Health Canada allocates funding to its regulatory programs.
In chapter 8, we looked at three programs that regulate the safety and use of products commonly used by Canadians: consumer products such as cribs, medical devices such as pacemakers, and drug products such as prescription drugs.
In an area so critically important to Canadians, Health Canada needs to know what levels of monitoring and enforcement its regulatory programs must carry out to meet its responsibilities, and what resources are needed to do the work.
We found that Health Canada does not have this information and therefore cannot demonstrate that it is meeting its responsibilities as a regulator.
[English]
In chapter 7, we looked how Indian and Northern Affairs Canada manages the treaty process with first nations in British Columbia on behalf of the Government of Canada. The Auditor General of British Columbia also presented a report last week on the provincial government's role in the process. This treaty process is important to all Canadians. Among other things, it could help first nations people in B.C. improve their standard of living and it could result in significant gains to the economy.
Since negotiations began in 1993, one final agreement has been initialled and two more are seen as imminent. However, no treaty has been signed and costs continue to grow.
We found that the federal government needs to better manage its part in the B.C. treaty process. Negotiating treaties is complex, it takes time, and it can be very difficult. The government needs to take these challenges into account and rethink its strategies based on a realistic timeline.
[Translation]
In chapter 6, we report on the Old Age Security program.
Around 4 million people receive Old Age Security benefits, amounting to about $28 billion a year. The number of beneficiaries is expected to double in the next 25 years. Errors that affect even a small percentage of clients can still represent a very large number and be very costly.
We found payment errors in fewer than 1% of applications. We are pleased at this low rate of error. We are also pleased to see measures such as an outreach program and a simpler application process to make Old Age Security more accessible to seniors.
[English]
We also looked at a case where the government created an obstacle to the effective operation of a foundation it established to support its environmental goals. In chapter 12, we noted that a clause inserted by the Treasury Board Secretariat in the government's most recent funding agreement with Sustainable Development Technology Canada prevented the board from making decisions in any given meeting where the majority of members present were federal appointees.
Finally, two chapters of this report note that we were unable to audit certain aspects of government operations because we were denied access to information and analysis collected and prepared by the Treasury Board Secretariat. Public servants base their denial of access on a narrow interpretation of a 1985 order in council that spelled out our access to cabinet documents. After numerous discussions with government officials, the issue was finally resolved three weeks ago with the issuance of a new order in council that clearly acknowledges my need for access to the analyses performed by the Treasury Board Secretariat. I thank the government for responding to our concerns.
[Translation]
Madam Chair, this brings me to the end of our introductory comments.
I would be happy to answer any questions members of the committee may have.
:
Thank you, Madam Chair.
Good morning again to you Madam Auditor General. I appreciate all your hard work to help us understand how government works. I know that Canadians who pay their taxes and work hard for their money want to get the best value possible for the dollars they send to our federal government.
I want to say initially that while your job is to point out where the deficiencies are and where we need to do better, there are a lot of things in government that work well and where Canadians do get good value for their money.
Obviously the key for us is huge amounts of money going into areas where there isn't proper accountability. We need to focus and improve on those areas. The IT spending really jumped out at me. You indicated there has been $8.7 billion approved for new business projects for the federal government over the last three years. That's a large amount of money.
Mr. Kramp's example of an IT project, on a small level, gone awry...I know others had that experience. I also had that experience when I was newly elected, with the first office I looked at renting. The landlord had stars in his eyes at the thought of a big fat government cheque coming in. He promptly beefed up the price, and I promptly walked away and went some place where I got a good deal.
I guess these are things Canadians worry about: that we are getting good value for the money and that we know what we're doing with the money.
What jumped out at me in chapter 3 was when you said that most of these large information technology projects suffered from the same shortages of experienced and qualified people and inadequate analysis of key business issues as before. This is a long-standing problem. You found that four of the seven projects were well-managed but that the quality of management varied widely, and those with weak project management practices experienced long delays and cost overruns.
There are all kinds of good examples in the private sector and in the public sector. What is the big stumbling block for our government in identifying best practices and getting those adopted, especially with these large IT projects?
:
Thank you, Madam Chair.
[English]
My thanks to our guests.
It's nice to see you again. Even in politics, sometimes we have occasion to say “I told you so”. I'm not saying this to you.
I have a case in my office from a victim of crime who had a complaint about Corrections Canada. I have a very thick file, if you're interested. The whole case was around reporting a complaint, and the people who were the subject of the complaint were the ones doing the investigation. It was one cover-up after another. Now I look at chapter 11, and you talk of Corrections Canada.
As a result of this complaint, we made it a priority in my office, and I started developing private member's bills to address the issue of Corrections Canada. I saw Corrections Canada mobilize against my private member's bill. I had many visits from them in my office. They attended committees. They did everything to kill these private member's bills. One part of those private member's bills that they were most concerned about was the creation of a board of directors, yet now we see everything you were able to discover.
When you have a complaint with Corrections Canada...they don't have a board of directors. They have one person in charge, a person whom I think they call a commissioner. The complainant, my constituent, this mother of a victim of crime—which makes her a victim also—persisted. I was pushing so hard here in Ottawa that, all of a sudden, she told me, “I can't talk about it anymore.” I don't have to be a lawyer to know that they settled, they paid, and the condition was that she couldn't talk about it anymore.
I know they are doing a lot of this, and it may be a reasonable practice. It may be the way we address complaints in law cases, but I call the fact that they're not accountable to anybody a crime. What came out of all of this? The one person in charge of Corrections Canada was moved—probably promoted, because that's how you compensate for weaknesses in a corporation of this size when you don't have a board of directors. But the new person coming in doesn't have a clue what's going on around them.
I'd like to ask you three questions. First of all, did you find evidence of employee perks around the ombudsman—the correctional investigator, as you call that person? It's been suggested in the media. I don't base anything on what I hear in the media, but I'm asking you if you found evidence of unusual perks. If so, have those people been charged?
The RCMP can take fifteen years to investigate this, but to me, when an audit determines unethical behaviour, well, unethical behaviour in government is theft. Could you tell us if the correctional investigator has been charged?
The next one is a two-part question. Can you give me some logic as to why Corrections Canada would not be subject to having a board of directors overseeing the operation, instead of one person with more power than the Prime Minister when it comes to talking about information in Corrections Canada, information that they refuse to give to the minister, information that they refuse to give to anyone in Parliament? They hide behind the fact that it's the Privacy Act that prevents them from divulging anything about Suzack. In his case, he was being transferred from maximum to medium security within two years when he had life. It's stuff like this, but they refuse to give information to the minister.
I'd like to tap your expertise. I think I know why they resist, but could you give us a bit of information as to how this would change your job if you had someone accountable to talk to, and the minister's job, if, when there was a problem, he could talk to the appointed board, which would at least fear to be replaced? The system, the way we have it now, is full of people who are promoted when they get in trouble.
:
Let me just start by saying that you are correct. This is a very important program, in terms of need for many of these people, but also in terms of size as well. Surprisingly to me, and probably to most Canadians, it is also a very complex program. There are a lot of really technical rules.
For Canadians who have lived here all their life, turned 65, and stayed here, it's fairly straightforward. But with an increase of immigration, there are a lot of technical rules about how long someone has to have been resident in Canada before and after reaching 65, and those will determine the pension amount.
As we say, the numbers will double within the next 25 years, and I would suspect as well, with increased immigration into the country, that the complexities will also change.
One of the issues that we noted is that the department doesn't have a very good system to manage quality overall. They do the tests, and they see that the error rates are low, but they need to have a quality management system in place to ensure that the error rate stays low.
When there are overpayments, there is action taken. They generally try to make arrangements with people to contribute a certain amount each month to pay down the debt. And I think we mention in the report--or maybe not--that about half of that is estimated to be not collectable, given the circumstances of the individuals involved.
One issue that we noted in there is that this management of these overpayments is not as good as it should be, and those receivables are not in the department receivables ledger, so it's sort of a separate system. It should have a little more attention given to it as well.
:
Thank you, Madam Chair. I would just like to echo that our objective in doing these audits is to help improve management and give assurance to parliamentarians about whether important systems and practices are working well or if there needs to be improvement.
On the whole question of monitoring, the performance measurement is critical to that. Do departments have in place good performance measures? I think we need to all recognize that performance measurement in government, in the public sector, is much more complicated than it is in the private sector. In the private sector, the measures are largely financial, tend to be earnings per share or stock price, so the systems are perhaps easier in a way. As well, in government a lot of the programs need to run for a very long time before you actually see the results. It's difficult for government. There's the question of attribution. For example, was it the government's actions that reduced poverty, or were there other factors?
It is very complex to do that. Nevertheless, I think that's why it is so important. We've done a number of audits over the years on performance measurement. The government has made good progress generally over the last ten years, but it seems to have sort of stalled lately. In the last few years we note that they aren't making the same kind of progress, and if I can be so bold, I think there needs to be more attention paid by parliamentarians. The departments produce a lot of this information. But honestly, I think a lot of people--and parliamentarians--will say that the review of those documents is not being done--for good and valid reasons.
If I can make the comparison with the private sector, when you buy a share in a company, everybody receives the annual report and the financial statements. I'm not sure everybody reads those cover to cover. You have a stockbroker who does the analysis for you and basically says buy or sell, or here's our recommendation.
I think parliamentarians may need a more rigorous analysis section, be it through the Library of Parliament or others--I know there has been discussion around that--that could help them do the analysis of the performance reports, and then they would be better able to question and to query departments about their performance.
So I think it's something we have to look at, and it has to be resolved. But there needs to be the pull from parliamentarians in order to improve the performance measurement system in government as well.
:
Thank you, Madam Chair.
Ms. Fraser, I fully understand why you made an effort to reassure the public in your report. You said that there were some disappointing incidents—I agree that some of the problems make for disheartening reading. However, it is quite another matter to blame more than 300,000 people.
Chapter 11 reads like a horror story. I do not want to dishearten anybody, but regardless of the management system—be it physical assets such as cars, human resources or money—problems arise. He was not the only one involved—other people filled in documents and must have realized that they did not have the requisite proof or that the register needed redoing or that they were being asked to do something inappropriate. However, whether we like it or not, as in the army, people often say that they have to follow orders from their superiors. And that brings us to the matter of ethics.
I wondered if you had any comments you would like to make. We are waiting for Bill . Irrespective of that vote, I wonder whether the situation would have been different had the Public Service Disclosure Protection Act, or another such act, been implemented?
The reason that I ask you this question, Ms. Fraser, is that during the last Parliament many senior officials and directors of organizations told this committee that the problem the bill supposedly addressed did not actually exist; they told us that the current system works well and that values and ethics were well understood. However, whenever such serious incidents arise, Canadians are left wondering what's happened to ethics in the federal government. That is of great concern to us, regardless of the size of the service.
Would the implementation of such legislation have allowed us to avoid this situation? Could it help us avoid a repetition in the future, or am I mistaken?