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I now declare the 61st meeting of the Standing Committee on Public Accounts in order.
Colleagues, today is the day we formally receive the fall 2012 report of the Auditor General. It was tabled in the House two days ago. We had an in camera briefing on the day it was actually tabled. This, however, is the formal public presentation of the fall report to this committee; we receive it formally and then decide, going forward, what action if any will be taken on any of the individual chapters.
The Auditor General is, of course, here with us today. I would say to colleagues that I've asked the staff to do a little calculation, and as long as we stay on the rails, we should be able to accomplish our regular rotation. We have enough time built into our system, but if it looks like that is not going to be accomplished, then I'll bring it to your attention as soon as possible, with a recommendation for adjustment to get us to the conclusion of the meeting. All this, of course, was precipitated by the fact that we just had a vote in the House and we weren't able to start at our usual time.
Before I proceed with the Auditor General, are there any interventions vis-à-vis the way we're about to proceed?
Mr. Chair, I am pleased to present my report, which was tabled in the House of Commons last Tuesday.
[English]
I am accompanied by Assistant Auditors General Jerome Berthelette and Wendy Loschiuk, as well as by Glenn Wheeler, the principal responsible for the audit of transfer payments to the aerospace sector.
[Translation]
The report contains the results of that audit. In the first chapter, we looked at how Public Works and Government Services Canada, Health Canada, and Human Resources and Skills Development Canada plan their use of professional service contractors. We found that the departments plan their needs for employees and contractors separately. This hampers their ability to assess whether they have the best mix of employees and contractors to meet their objectives.
Departments need to consider the full range of options that will enable them to most effectively deliver programs and services to Canadians.
[English]
I'll move now to our report about grant and contribution program reforms. In May 2008 the government announced an action plan to reform the administration of grant and contribution programs and to streamline the administrative and reporting burden on recipients. Our audit looked at whether the government has adequately implemented this action plan. We found that the government has in fact focused its actions where they're most important. Treasury Board Secretariat has provided leadership and guidance to federal organizations to make the necessary changes, and these organizations have acted on most of their obligations. The government has made good progress in implementing the 2008 action plan. Now it needs to determine if the actions taken have made a difference for recipients.
Let's turn now to our audit about what government is doing to help protect Canadian infrastructure against cyber threats. Critical infrastructure includes the power grid, banking and telephone systems, and the government's own information systems. The government has a leadership role to play in ensuring that information about threats is shared, and it has to improve the way it does this. This is important because officials are concerned that cyber threats are evolving faster than the government can keep pace.
In 2001 the government committed to building partnerships with the owners and operators of critical infrastructure systems to share information and provide technical support. We found that 11 years later, those arrangements are not fully operational. Similarly, the Canadian Cyber Incident Response Centre has only been operating eight hours a day, five days a week. It's not the 24/7 information hub it was designed to be in 2005. Furthermore, it's not being kept abreast of cyber security incidents in a timely manner.
Since 2010, the government has made some progress in protecting its own systems and building partnerships to secure Canada's infrastructure. The government must now ensure that the sector networks are in place and working with the Cyber Incident Response Centre.
We are also reporting on how National Defence and Veterans Affairs Canada manage selected programs, benefits, and services to support eligible ill and injured Canadian Forces members and veterans in the transition to civilian life.
There are many support programs, benefits, and services in place to help ill and injured members of the military make the transition to civilian life. However, we found that understanding and accessing these supports is often complex, lengthy, and challenging. The lack of clear information about programs and services, the complexity of eligibility criteria, and the dependence on paper-based systems are some of the difficulties for both clients and departmental staff.
We also found inconsistencies in how individual cases are managed and problem-sharing information between the two departments. As a result, forces members and veterans did not always receive services and benefits in a timely manner or at all.
National Defence and Veterans Affairs recognize they need to work together on solutions. I'm pleased they've accepted our recommendations, including to streamline their processes to make programs more accessible for ill and injured forces members and veterans.
[Translation]
The next report also concerns National Defence—specifically, how the department is managing its real property at 21 main bases across Canada. The Canadian Forces rely on real property such as buildings, airfields and training facilities to carry out missions. These assets are valued at $22 billion. I am concerned that the department is not yet adequately maintaining and renewing its assets.
We found several weaknesses in the department’s management practices. For example, the approval process for construction projects is cumbersome and slow. It takes an average of 6 years to approve projects over $5 million.
We also found that National Defence is behind in its spending targets for maintenance and repair, and recapitalization. As such, weaknesses in National Defence’s management of real property could jeopardize the Canadian Forces’ ability to carry out its missions. National Defence recognizes it needs to improve and change its approach to managing real property.
We also looked at two programs that provide repayable assistance to support industrial research and development in Canada’s aerospace sector. Since 2007, Industry Canada has authorized almost $1.2 billion in assistance to 23 Canadian aerospace companies through the Strategic Aerospace and Defence Initiative and the Bombardier CSeries Program. Industry Canada has done a good job of managing most of the administrative aspects of the two transfer payment programs. However, we found that the department has been slow to measure progress against program objectives and report results publicly. Repayable support to the aerospace sector represents a significant investment on behalf of Canadians. Industry Canada has a responsibility to ensure that funding contributes to meeting the government’s objectives in this area.
[English]
Finally, in our audit focusing on long-term fiscal sustainability, we found that Finance Canada analyzes and considers the long-term fiscal impact of the policy measures it recommends. However, at the time of the audit, the government had yet to make public its reports on long-term fiscal sustainability. Analysis that provides a long-term budgetary perspective would help parliamentarians and Canadians better understand the fiscal challenges facing the federal government.
The department has accepted our recommendations. Following the tabling of my report in Parliament, the department issued its first long-term analysis for the federal government. We also recommended that the department publish, from time to time, an analysis for all governments combined—federal, provincial, and territorial—to give a total Canadian perspective.
Mr. Chair, that concludes my opening statement.
[Translation]
We will be happy to answer any questions you may have.
Thank you, Mr. Ferguson and your officials, for joining us today.
There has been a lot of talk over the last few days about your report with respect to cyber threats. The word “progress” seems to come up. The Prime Minister liked to use that word in the House. I notice it appears several times in your report, usually qualified by something called “limited” or “slow”.
You talk about 11 years of working, for example, to obtain cooperation and partnerships with infrastructure holders and owners and operators, the lack of progress we have seen, for example, in communicating with critical infrastructure owners and operators. Could that be in any way related to the nature of cyber threats? It seemed to me the excuse is that cyber threats keep changing. But surely communicating with the stakeholders, establishing the awareness, for example, of the centre, making sure people know that reporting is a requirement in order to coordinate a response, it seems to me, have nothing to do with the changing nature of cyber threats, but rather have to do with government organization itself.
Would you agree with that, or is there another explanation?
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When we raised the question about action plans when we started the audit, one of the things we wanted to do was to determine what were the steps, what were the things that government had said it was going to do in this area. Then we wanted to be able to measure progress against those steps.
We found there weren't any itemized action plans that we could compare to assess their progress, in terms of what they were going to do, where they were going to be in x number of years. Then you've got something you can assess as to whether they've made the right amount of progress, but we didn't find those types of things.
Certainly those types of action plans, we feel, are important in guiding any significant initiative. It's one thing to say here are our objectives, but in terms of the objectives, you then need to say, here are the actions that need to take place to achieve those objectives and here is the timeline in which we expect to do that. Then the government departments can use that as a guide for making sure they're on track, and folks like us who do audits can then make an assessment to say if they appear to be where they need to be, based on the original plans.
Welcome once again to our distinguished visitors. We're happy to see you again.
I've had the honour and the privilege of being on this committee for a number of years now, and I can tell you that your reports are important to Parliament. We take them in the vein and the context and the constructive nature in which they're proposed. Thank you for that.
I want to talk for a second about the transition of ill and injured military personnel. I have a bit of a personal hobby horse, in that my riding is adjacent to CFB Trenton, the air transport capital of Canada. As such, I have witnessed personally and have talked to many families who have experienced operational stress or who are subject to the fallout from it.
I was particularly pleased to attend with Minister MacKay when we made the announcement as a government of six operational stress centres opening in Canada—one of them right in Trenton. I can tell you first-hand that it was needed, absolutely. Does it solve all of our problems? No, but there was a step forward. I am so impressed with what I have seen in a short period of time there.
I know that in your evaluations you would have undergone some study of the operational stress centres. Could you give us some indication of the kind of workload they're facing and how they're adapting?
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Fine. Thank you very much.
Some of my colleagues may find it a little different for me to be agreeing with my colleague across the floor, Mr. Harris, when he stated that cyber threats are steadily evolving. This is something that's going to require constant attention to detail, and as the technology advances, so must our security advance. They have to go hand in hand, and we recognize that fact.
I recall that in this committee a few years ago, we had a great challenge—and it was put forward by the Auditor General—that demonstrated a lack of interoperability among the communications systems of various departments and/or ministries and between DND and police forces, etc., and a number of changes were made in that regard.
I notice that back in 2011 our government introduced the government IT shared services initiative. It puts in place a sharing framework to facilitate the dialogue amongst all the shareholders. It's critical that we have that dialogue, because if we don't have that dialogue, we can't identify the problems.
With cyber threats being the vast domain that they are, are you comfortable that this initiative is at least leading us in the right direction to deal with them?
Thank you for joining us today.
I would like to discuss chapter 7. And I would appreciate your keeping your answers brief, if possible, as we have only five minutes.
I am referring to the report on long-term fiscal sustainability. In 2007, the government committed to publishing a report but did not do so. In 2011, the Office of the Auditor General encouraged the government to publish such a report, but, once again, the government did not do so.
A report of this nature should provide an analysis of current and future demographic changes and the implication of these changes on Canada's long-run economic and fiscal outlook. Do you think such a report would explain or justify changes to old age security, for instance? Would such a report have been useful? Would it have made it possible to justify changes to these kinds of programs?
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Thank you, Mr. Chair. Thank you, Mr. Auditor General.
Chapter 5, recognizing that the responsibility was to look at the stewardship and management of the real property of DND.... Just as a little background to help the viewers understand, National Defence real property includes 2.3 million hectares—that's not acres, that's hectares—some 20,000 buildings, and over 13,000 works and installations. That reaches from coast to coast in this great country and the territories. In fact, the buildings themselves go back to World War I. If you include the Citadel in Quebec, they go back to the War of 1812.
For most people watching, the sheer scope and conditions of the infrastructure and real estate are a little hard to envision because of the size. Considering the magnitude of trying to manage a real property with 2.3 million hectares, 20,000 buildings, 13,000 works, in every province and territory across Canada, is there any weight given to that consideration of it?
Secondly, is there any other department that would compare in scope and diversity of holdings?
In addition to the Department of Finance, there are other institutions and agencies that do indeed provide advice, actuarial advice, on the implications of budgetary decisions. For example, the Office of the Chief Actuary provides advice to Parliament through its reports on the fiscal sustainability or the fiscal circumstances surrounding OAS and GIS, through a triennial report.
The ninth actuarial report on the OAS/GIS program was based on circumstances as at December 31, 2009, but it wasn't tabled until July 20, 2011. Subsequent to that—the Office of the Chief Actuary, as is allowed through legislation, can produce supplementary reports—there was the tenth actuarial report, necessitated by Bill , which increased certain GIS benefits for seniors. That bill was assented to by Parliament on June 26, 2011, but the chief actuarial report concerning that, the tenth report, wasn't made available until November 4, 2011, three months after laws had been passed.
The eleventh report by the Chief Actuary on the OAS/GIS program was necessitated by changes to OAS/GIS through Bill , which was made into law on June 29, 2012. That information wasn't given to the minister until July 18, 2012—again, well after these proposals, these budgetary proposals that affect the long-term sustainability of a very important program to the Government of Canada and to Canadians, and well after the budget had been made into law. Is that acceptable?
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Thank you, Chair, and my thanks to the Auditor General.
Auditor General, in chapter 3, in paragraph 3.20, you've identified funding of some $780 million that had been allocated from 2001 through 2011 to address some different things. Of that $780 million, which part is cyber security? The report says:
Therefore, we were unable to determine how much of the $780 million was specifically allocated to activities for the protection of critical infrastructure from cyber threats.
It seems to me that's a fair amount of money. It's a large sum of money, $780 million. It wasn't all to be allocated, I believe the report is trying to tell us, for a specific cyber threat. It might have to do with some other infrastructure around Public Safety Canada, etc.
When you go to paragraph 3.21, the last part of it is that Public Safety Canada officials informed you that they had spent $20.9 million of the remaining $210 million on cyber protection for critical infrastructure between 2001 and 2011. If my math is right, that's about $2 million a year over 10 years.
I know enough to not ask you to judge whether that's an appropriate amount or not—of course I wouldn't ask that question. But it's disquieting for me not to be able to follow the money. Where did it go? The department was unable to tell you where the cyber security money went, whether it went to other departments. They couldn't answer that. How much did they really spend? They didn't really know. Is that a fair sense of what is being told to me here?
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I don't mean to cut you off, but I only have five minutes.
My question is in regard to the actual hand-off, because that's where there is potential for confusion, certainly from a service member's point of view, going from one case manager to another case manager.
Could I ask you, when you looked at the Department of Veterans Affairs, did you take into account the transformation initiatives, things like streamlining, simpler letters that are being written rather than the kind of complicated language that used to be in place, and less paperwork? I know in my area one of the big improvements has been something as simple as putting in for mileage, not having to submit Google maps every time. Some of these things have made it a lot easier on veterans.
I'm just wondering if you guys looked at the transformation initiatives as well in your investigation.
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Again, we looked at the whole process as it was at the time that we were doing the audit. We identified that there were still issues around how people access programs.
For example, you mentioned language. We did a language assessment of a number of pieces of information, and we found that the language used in some of the explanations and information for veterans was still too complex and needed to be improved.
So we identified that there were things going on, but in general there were still those types of obstacles that still made it hard for people to access those programs.
Back to my previous response, I just want to make clear that what I was trying to get to was that in that handover, it's important for there to be consistent information in databases about these people from one side, from the Canadian Forces, to Veterans Affairs, so that there is accurate information about these individuals. That would help make that hand-off more efficient.
I am just following up on my questions earlier. The Office of the Chief Actuary provides actuarial advice for the Canada Pension Plan, the old age security program, the Canada student loan program, and for other public sector pension plans and benefit plans.
Mr. Ferguson, the Office of the Chief Actuary is part of the Office of the Superintendent of Financial Institutions, and the Office of the Superintendent of Financial Institutions reports to the Minister of Finance, and it's actually housed in the Department of Finance.
I appreciate that there may be some machinery of government issues on why you may not have actually audited or included in the audit specifically the Office of the Chief Actuary or the Office of the Superintendent of Financial Institutions, but clearly it is housed within the Department of Finance. It just seems to me that this is an incredible wealth of information. If I'm projecting your message to Parliament in your seventh chapter, it is that we can do better. We can provide more credible, more responsible information for parliamentarians and Canadians in the decision-making process by having that information available to Parliament before decisions are taken. I don't want to put words in your mouth, but that's the message you projected to me.
It would seem to me that if you have an organization like the Office of the Chief Actuary, which is housed in the Department of Finance, which you audited, you'd want to include that type of information as to whether or not that's being disseminated to Canadians and to Parliament in a timely way.
Was that a consideration at all? I know that Ms. Cheng was part of the audit team, the lead principal on that. Maybe she might want to address it, or you yourself.
The issue I flagged is that this information is actually being collected in various measures through the Office of the Chief Actuary, through the Office of the Superintendent of Financial Institutions, which is housed within the Department of Finance. Those agencies are actually mandated to make their information public. They're not doing it on a timely basis, and it appears to me that this is an opportunity for us—it's not a problem, it's an opportunity—to utilize that in a far more effective way.
I queried this particular issue about how the Office of the Chief Actuary does their assessments, the range, when they projected to 2030. The Office of the Chief Actuary actually has a range, a best estimate, but it has a range of costs that by 2030 the OAS program could be as low as $70 billion in costs and as high as $140 billion in costs. The way you refine that is to use multivariate analysis, as opposed to single variate analysis, and to use resources to actually get a better scoping down of the unknown.
Do you think that's a sensible approach? Should Finance Canada take more of an initiative in getting better data with a better range or better limits of what their estimates might be?
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It appears, then, that if you have the Office of the Chief Actuary, which has a staff, it has resources, it's spending money, and it's doing analysis—it's a stovepipe that's operating independently from the Department of Finance. It's operating independently from Parliament, because when the Office of the Chief Actuary doesn't actually even table their analysis of these important initiatives until after they are passed into law, we're missing something. We're missing a valuable opportunity for decision-making.
Then you have the Department of Finance, which is doing its own analysis. I hope they're actually utilizing the Office of the Chief Actuary when they do that.
Even the Office of the Chief Actuary has admitted, through a question I posed to them, that they actually do a fairly rudimentary analysis of long-term fiscal planning of actuarial work related to the OAS in particular. The range they came to was that by 2030, OAS could cost Canadian taxpayers $70 billion—which, in other words, means there's no problem within the fiscal sustainability—or it could actually cost as high as $140 billion. Their best estimate is that with the changes as a result of Bill , it will be around $90 billion.
For you, who tabled this report about getting this right, getting fiscal sustainability right, would it be advisable to do a sharper, more precise analysis and report that to Parliament?
Given that we're sharing the time, I'd ask that the responses be as brief as possible.
I want to reflect on the real property in Defence, chapter 5. We know that the Department of Defence has many assets, but they also have a very big budget and there's a targeted amount for repair.
In your opening statement you talked about the weaknesses in the government's approach in their management of real property, that it could jeopardize the Canadian Forces' ability to carry out its missions, which I find to be a serious concern.
You also indicated in your report that the failure to have a completed strategy framework and development plan means that the department can't know if they have the required real property assets at the right place at the right time to meet the operational requirement.
You also said the operational failure of risks to health and safety are present because maintenance practices are inadequate. Some bases didn't even have the money available to them to address identified problems with health and safety, particularly fire codes.
If you have a targeted budget and you don't spend it, that seems to me to be a problem regardless of the size or age of your assets. Am I right in characterizing it that way?
I see the point.
The government's response clearly shows that it does not intend to follow through on this recommendation, meaning it does not anticipate introducing a measure to this effect. That's unfortunate, especially given that, according to your report, the Department of Finance had information on the impact its decisions would have on the health transfer. The department was aware of how the changes could affect the provinces but did not disclose that information. I realize you can't comment on this point specifically, but the government reminds me of a child trying to hide mischievous behaviour so as not to get in trouble.
It's a shame that the department will not commit to this recommendation. There's nothing more to say. It wouldn't be hard to accept the recommendation, and yet only one part was accepted.
From its response, I gather that the department does not accept the recommendation in full. Would you agree?
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Thank you very much. I appreciate your concern.
It's certainly the purpose of this meeting to hear the information you have on all of the various chapters you presented to us. We will then be taking a look at it and deciding what is important to our committee.
I suppose from that particular point of view, the only chapter we haven't looked at yet is chapter 1, so I would like to talk about that.
I have served on the aboriginal affairs and northern development committee. I was also a hospital board chair for a number of years. So I have a special interest in those particular areas and the topic of professional service contractors.
In the part of the chapter that looks at integrating human resource planning, you indicated that Health Canada is in the process of implementing an information system to collect and summarize data on employees and contractors. I'm just wondering if you could comment on how the full implementation of such a system would improve human resource planning in that department.