Mr. Chair, I am pleased to present my fall 2016 reports, which were tabled in the House of Commons this past Tuesday. The reports provide the findings of seven audits and three special examinations. I am accompanied by Gordon Stock, Richard Domingue, Carol McCalla, and Jean Goulet.
Many of the issues we are raising today we have also raised in the past. We see government programs that aren't designed to help those who have to navigate them, programs where the focus is more on what civil servants are doing than on what citizens are getting, where delivery times are long, where data is incomplete, and where public reporting does not provide a clear picture of what departments have done. These recurrent problems create increased frustration for individual citizens.
Let us begin with our audit of the beyond the border action plan, where we found that some initiatives have produced little value, and that obstacles could limit the impact of others.
For example, several departments spent almost $80 million on a system to let importers submit customs information electronically. This system has been in place for more than a year, and it is used to process less than one per cent of shipments entering Canada.
Also, the Canada Border Services Agency spent $53 million on a system to track who is entering and leaving the country. However, the agency can't make full use of it because it can't legally share travellers' information with the United States.
The governments of Canada and the United States launched the action plan in 2011 to enhance border security and speed up travel and trade. The plan was ambitious, comprising 34 initiatives with an initial deadline of three years.
We found that the organizations involved could show some progress for the almost $600 million they have spent. For example, the Canadian Air Transport Security Authority was using new baggage screening technology at seven Canadian airports. However, there is still significant work to be done before the government achieves value for the more than $1 billion allocated to this action plan.
Let us turn now to our audit of tax objections.
The Income Tax Act is complex, and taxpayers often disagree with the Canada Revenue Agency's interpretation of the Act. Our audit found that the Agency took too long to decide if a taxpayer's objection was right. For example, it took more than five years to resolve 79,000 cases worth almost $4 billion.
We found that the agency's time frame for a decision on straightforward files was about five months. For medium complexity files, the agency told taxpayers they could expect to wait up to a year before even hearing from an appeals officer.
Furthermore, the agency's performance targets didn't consider timeliness from the point of view of the taxpayer. For example, the agency didn't count days that a file spent waiting for an appeals officer to be assigned.
Overall, we found that in 65% of objections, the agency ruled in whole or in part in favour of the taxpayer. However, the agency rarely used these results to improve future decisions.
In our audit of the Correctional Service of Canada, we found that as the indigenous offender population grows, the Correctional Service can't provide them with the rehabilitation programs they need, when they need them.
More than three quarters of indigenous offenders were sent to medium or maximum security institutions. From these institutions, most couldn't access the programs they needed for their rehabilitation before the earliest possible date they became eligible for parole. As a result, the Correctional Service prepares indigenous offenders for parole hearings less often than non-indigenous offenders.
We found that two thirds of released indigenous offenders had never been on parole. Half of them moved directly from medium or maximum security institutions back into the community, which means they had less time to benefit from a gradual and structured release.
Indigenous offenders are caught in a vicious circle. Most do not get timely access to the programs they need, and because they have not completed a rehabilitation program, they do not get released on parole as early as they could.
Let's turn now to another first nations' issue. In 2007, the federal government committed to a new process called Justice At Last to try to resolve long-standing specific claims, which often relate to the administration of reserve lands.
The government wanted to resolve specific claims fairly and transparently, preferably through negotiations. It also wanted to resolve the claims faster, to provide justice for first nations and certainty for government, industry, and all Canadians. However, some reforms have in fact created barriers that have prevented first nations and the federal government from resolving claims.
For instance, Indigenous and Northern Affairs Canada changed its negotiation practices without consulting first nations. It also significantly reduced its funding to first nations to research and negotiate their claims. These changes made claim resolution more difficult. The department was aware of these barriers but didn't address them.
The department publicly reported that the 2007 reforms were a success. However, in our view, most of the settlements used to support this assertion were either resolved or close to being resolved before the justice at last process was implemented. In fact, since 2008, almost as many claims were closed without resolution as were resolved.
Now I want to address our audit of motor vehicle safety. Through its oversight of the motor vehicle safety regulations, its monitoring of public complaints and vehicle recalls, and its investigations into alleged defects, Transport Canada plays an important role in keeping passenger vehicles safe. However, we found that Transport Canada hasn't kept the regulations up to date, so the department is lagging behind the pace of changing technologies. For example, the regulations don't allow vehicles to be equipped with software-operated advanced headlights, but semi-autonomous vehicles controlled by unregulated software are currently on Canadian roads. It can take Transport Canada more than 10 years to update its regulations.
This means that Transport Canada's approach to setting vehicle standards could prevent Canadians from having access to some safety technologies available in other markets.
We also found that Transport Canada generally did not consult stakeholders other than manufacturers about proposed regulations, and it did not actively gather information from manufacturers about their investigations into vehicle safety defects.
In the first of two audits related to the military, we looked at recruitment and retention in the Canadian Armed Forces. We found the Forces did not have the right number of trained members in the right occupations so that Canada can meet its national and international military commitments.
Four years ago, the Regular Force was about 2,000 trained members below the number it needed, and at the end of our audit, we found it is short-handed by 4,000.
In 2016, there were 21 military occupations that were significantly understaffed, and there were 23 with high attrition rates. National Defence must understand its staffing challenges and tailor its recruiting and retention approaches by occupation.
We found that the Canadian Armed Forces' recruiting process fit its own needs and not those of applicants. On average, it took 200 days to enrol a recruit. In some cases, the recruiting group closed the file of an applicant who was still interested in enrolling. This meant that the Canadian Armed Forces lost some qualified candidates. We found these same problems in 2002 and 2006. We believe that without significant changes to recruiting, it's unlikely the regular force will reach its target of 68,000 members by 2018-19.
Turning to the second of our military-related audits, National Defence depends on having equipment available and in good working condition when they need it. Costs to operate and maintain military equipment can be more than twice the cost of buying it, and if National Defence doesn't manage support costs properly, the equipment may not be available or its life may be shortened.
We found that when National Defence decided to buy major military equipment, it used poor planning assumptions about support costs, how it would use the equipment, and how many personnel it needed to operate and maintain the equipment. This means that National Defence paid for services that it couldn't use.
In addition, National Defence assumed that the cost to support new equipment would be no more than the cost to support the replaced equipment. However, we found that the maintenance costs for the new Hercules airplane were actually $7,000 more per flying hour than for the airplane it replaced.
National Defence needs to better align its equipment support, including personnel, operating costs, and maintenance resources with its life cycle planning of how that equipment will actually be used.
This brings me to the reports of our three special examinations.
In the case of the Pacific Pilotage Authority, we are satisfied that the corporation had good control of its resources and activities. However, we made recommendations in seven areas where we felt improvements were needed.
In the case of the International Development Research Centre, we found that the centre's ability to conduct business was significantly at risk because it didn't have enough board members. This problem persisted for at least three years, although recent appointments should now help.
As for the Atlantic Pilotage Authority, it experienced a number of significant problems ranging from a lack of strategic direction to its inability to confirm that its pilots and boat crews continuously met skill and safety requirements.
To close, I want to go back to my earlier remarks about the frustration of citizens with government programs.
One way or another, everything the government does is intended to serve Canadians. As such, departments should do service well to benefit Canadians both individually and collectively.
As I mentioned, there is nothing new about the issues we found in these most recent audits. We have seen many of these problems before. And in some cases, they are getting worse.
It often takes departments too long to deliver, such as in the case of Canada Revenue Agency making decisions about tax objections.
Public reporting is not very good. Sometimes, it is incomplete or even inaccurate, such as we found in our audits of the beyond the border action plan or the resolution of first nations specific claims.
Elsewhere, it's clear that departments can't always show value for the money they've spent, such as National Defence's support contracts for military equipment or the implementation of initiatives under the beyond the border action plan.
It's critical for government departments to understand that their services need to be built around citizens, not process. As they work to implement our recommendations, I encourage them to take a step back and focus on how they can deliver services that work for Canadians.
Mr. Chair, that concludes my opening statement.
I will be happy to answer any questions you may have.
Mr. Ferguson, sir, I would like to congratulate you and your team on your excellent work. I believe these reports are timely. I also commend you for taking the time to cover the last five years in your own report and for providing us with your observations on the government's bureaucracy.
I find it interesting, especially as a new member of the House of Commons, to see your suggestions and recommendations on how the bureaucracy could be improved. I really appreciate the fact that you do not blame the people who work with us here, but instead make practical suggestions. Thank you for that as well.
I found certain reports very frustrating, as you did also. I would like to talk about them a bit. National Defence and first nations issues come up very often in reports. Unfortunately, we do not see any improvement from year to year. It is almost offensive that nothing changes.
In your report at page 4—I have the English version in front of me—is the message from the Auditor General, in which you talk about Canada's indigenous people and say that your predecessor, Sheila Fraser, near the end of her mandate summed up her impression of 10 years of audit and related recommendations on first nation issues with the word “unacceptable”.
Since your arrival, you have continued to audit these issues and to present at least one report per year on areas that have an impact on first nations, including emergency management, policing services, on-reserve access to health services, and most recently, correctional services.
When you add the results of these audits to those you reported on in the past, I can only describe the situation as it exists now as beyond unacceptable. We had unacceptable before, and now we are beyond unacceptable.
I'd like to get from you your sense. For the past 10 years, and even before that—I'm not saying it is just the past 10 years—there has been a systemic problem in addressing first nations concerns. As the committee does its work here, what can you share with us about how we can do better in trying to change that culture and get to the systemic problems that exist in the system?
Thank you for that answer.
I have a full-time employee in my constituency office, and probably 60% to 70% of that person's time is spent working on CRA interventions. This is because people come to our counter, or they call us, and they are trying to resolve something that's happening at CRA. Although I speak for myself, I think every member of Parliament could attest to that fact. The debriefing of those situations, which I sometimes do with my staff person, exposes this problem.
I know the problems. I know it is anecdotal to talk about the Brantford member of Parliament's office, but let me tell you, this is something we see every day. We see it. My staff sees it. I use the word “customer”. In terms of the customer, the unfriendliness, the barriers that are put up—often for no good reason—the duplication of work, the many things that happen along the way, the change of a file going from one desk to another desk, these things must....
It was mentioned earlier that we're not going to point a finger, but at a certain point, we must point a finger, not at a particular individual, not at one of the senior managers, but we need to point a finger at the processes that they follow, which absolutely frustrate Canadians day after day when they're dealing with agencies.
I said in an earlier meeting that if a survey were done of Canadians who've dealt with government bureaucracy, the people who are inside government, about their issues, and how satisfied they were, what their experience was like, I suspect you would find that it's not very high, because I've seen frustration over the years. CRA is one of them. We have other ones here. We hope to study them all.
Going back to what you provided for us in your report this time, which is your message of observations since you've been in this role, and you're about halfway through your mandate, I see it as a window of opportunity. I'd like to ask you publicly, do you see this as a window of opportunity to expose, from the 30,000-foot level, the kind of cultural change that we should be driving towards in terms of government services being provided in what I call a customer-friendly way, a citizen-friendly way, versus the way it is today?
Thank you, Mr. Ferguson, and your staff, for another fantastic job on behalf of Canadians by your department.
Like Mr. Lefebvre, I want to spend a few minutes of my opening time talking about your message. We don't receive those very often. It's somewhat outside the normal procedure. I thought it was interesting, given the impact of your predecessor's final message, and you have picked up on that. I must say, as someone who was here before and after, that for us it has been seamless going from one fantastic auditor general to another.
This message is resonating with this committee. You note that you're halfway into your term, and this is a reflection of some of your observations. It's also timely, because we're just a little over one year into a new majority government that has publicly committed to do things differently, so it's a great opportunity to revisit these things.
I thought the quote you used was interesting. You said that in terms of the audits and what's going on, in the immortal words of Yogi Berra—I attributed them to you in the news clip, but it was actually you attributing them to...but take the credit while you can—it's like déjà vu all over again.
That is exactly what it seems to be like, particularly when we're now seeing more and more repetition of audit findings that are similar. We've been on this over and over, but we're getting a bigger buildup of case study that shows this is the case. It's the “one and done”; as long as the departments can get through the immediate public scrutiny when you launch your report and when we hold a hearing, they are pretty much into safe waters. Our goal is to work with you to ensure that doesn't happen, and that we hold more focus on these things.
One of the things you have mentioned over and over again—you already commented on it but we have to keep drilling it down—is to do service well. I would like you to talk again about how you think government is looking too much at measuring how well they are doing their internal steps, and not doing enough measurement from the point of view of citizens.
I completely agree with Mr. McColeman that not only with regard to Canada Revenue Agency but in most areas where there's interaction with government, there's great frustration. People feel like they just don't matter. They are lost in the system. That's why they come to us asking, “Can you help me cut through all this?”
In terms of the refocusing that you think needs to take place, how does that happen? I assume it starts with the ministers and deputy ministers and works its way through, but how do you see you and us working together to bring about that cultural change so that the view of success is how well things are being delivered to the actual citizen, rather than how well we check off our internal boxes?
Thank you to the Auditor General and to his departmental officials for being here today and speaking to our committee.
I want to talk about the income tax objections and your report on the Canada Revenue Agency. I want to highlight some of the things that I found and then ask a question about what you looked into in the process of objections.
I know how challenging it is for people. There are constituents who have come to my office saying that they have had to wait for months, but in your report, you highlight that some Canadians are waiting not just months but years or over a decade for a particular objection to be resolved. It's quite disheartening to hear of that lack of service being provided to our taxpayers, particularly when we have a Taxpayer Bill of Rights that specifically gives Canadians 16 rights that are centred around accuracy, professionalism, courtesy, and fairness.
When a taxpayer files an objection and then perhaps is not successful, they potentially end up having to pay interest, sometimes hundreds of dollars. Over the past decade we've seen that these objections have more than doubled and almost tripled.
In your report, you say that objections were not being processed in a timely way. You specifically say that the CRA didn't “adequately analyze or review decisions” and at the same time, “there was insufficient sharing of the results of these objections and court decisions within the Agency”.
In any department, of course there is policy, procedure, and practice. At the beginning of your report where you outlined the objections process on page 1 of report 2, you talk about how CRA manages its process through the appeals branch of the department.
At the same time, I am aware that taxpayers can also file complaints about service, and they can do that first through the CRA, and then if they are not satisfied with the result of that complaint, they can go to the taxpayers' ombudsman.
Did you have a chance to review with the taxpayers' ombudsman what happens at that level, and how effective they were or were not in helping taxpayers get their issues resolved in a timely, fair, and accurate way? I know there's been a conversation. I previously sat on the immigration committee, and in speaking to colleagues, I know that people have talked about the idea of an immigration ombudsman. I wonder if you had a chance to look at how it's working within CRA and whether or not it's helping.
I suspect many of the objectives of an ombudsman would be similar to the types of inquiries you are making into how effectively the department is running and how well it is serving Canadians.
If your notes were scattered, it was probably because my comments were scattered.
In terms of the performance indicators, I think what I would do is look at the audit we did on the beyond the border action plan, in which there was a series of 34 initiatives.
Government departments have spent $600 million, and the total amount they have dedicated to the action plan is more than $1 billion. What they were reporting on, though, was whether they had completed something. Did they build a system?
The action plan was all about improving security at the border and speeding up travel and trade at the border. For a department to say that they built a new system doesn't tell you whether the security is any better at the border, and it doesn't tell you whether people and goods are moving faster across the border.
That's the type of thing we mean when we are looking at the performance indicators. If you are going to put $1 billion into building a number of systems and a number of initiatives and you have a direct objective of increasing security at the border or speeding up travel and trade at the border, then how can you tell whether those initiatives have actually done those things?
I get that it's hard. We struggle in our own office with how to measure the value of an audit. It's not easy to measure the value of an audit. I think we need to at least keep going back to look at an audit to see whether we think we have provided value to Parliament and to the government from doing the audit, rather than just say that we'll measure how long it took or how much it cost to do an audit and then say that we have a measure. That measure doesn't get at what is important, which is the value coming out of the audit.
Similarly, in this type of thing it's not good enough just to say that they'll measure whether they have completed something or not. They have to find ways of saying that they spent $80 million on a new single-window system to track what's coming into the country and what goods are being imported into the country but that fewer than 1% of importers are actually using it.
What the department has said is that they're going to improve that rate, because they're going to shut down all of the systems and make this one mandatory. Well, making a system mandatory will increase the number of importers who are using it, but it doesn't necessarily mean you're going to have importers who are happy that they are going to have to use it. How are you going to know that this is the right step to take because it is a good system?
It's all of those types of things that are our frustration when we look at the performance measurement.
One thing I want to touch on—and I'm glad you raised this particular recommendation and this particular response.... Fundamentally, what we are trying to get to is that the Canadian Armed Forces are 4,000 trained members below the number they need. In fact, the problem has become worse over the last couple of years. It was about 2,300, and now it's 4,300, or something like that, so it has become worse. These are the numbers that they themselves have said they need.
When the three environments—army, navy, air force—get together, they identify how many people they need and then they pass it over to the recruiting people, and the recruiting people say they don't have the capacity to do that and so they're going to recruit a lower number.
We made a recommendation here—and our recommendations are about needing to put the focus on the individual occupations and all of that type thing—and we get this type of response from National Defence. As you say, when you read that response, you get the feeling that they're essentially saying, “We already have this in place.” That's fine. You think you have something in place. How is any of this gong to be get you to the point of having the number of trained members you need to have?
The department can look at our recommendation and can come back with a response that says either what they're going to do or what they are already doing, but none of it is actually telling you whether any of this is going to get you to that point.
The wait time, if I understand what you're referring to, is the amount of time in the middle of a training program that a person has to wait around for the rest of their training.
Is that the issue? That's the issue that we raise, in terms of the waiting: somebody will come in, and they'll start their training program perhaps, and then they have to wait because the next stage isn't ready, and in some cases they'll wait many months. During that time, the Canadian Armed Forces find something else for those individuals to do. It may be first aid training or those types of things, but it's not training that's getting them trained for their actual occupation and ready to get into that occupation.
Again, they need to find ways of making the training more efficient so that there is less waiting time for the recruits coming in.