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Colleagues, I now declare meeting 42 of the Standing Committee on Public Accounts in order.
I have a couple of minor business matters before we begin.
At 4:30 it will be necessary for me to leave the chair; something else has come up. Given the fact that the vice-chair is the person who selected this chapter it would tie the hands of Ms. Jones, so I bypassed her in filling in that last hour. I hope that's okay. I assumed she'd rather be there asking questions. So I've asked Mr. Hayes, who although not a vice-chair is a veteran of the committee, if he would fill in for that last hour, and he's agreed. I hope the committee finds that acceptable.
As you know, we're here for chapter 6, transfer payments programs—CanNor, of the spring 2014 report of the Auditor General of Canada.
Before we turn our minds to that, I want to take one moment on behalf of the committee to recognize publicly the fact that Jocelyne Therrien is leaving in January. She of course is the principal of parliamentary liaison at the Office of the Auditor General. We know her as the person who makes the body of the work of the Auditor General actually work.
Jocelyne, in this whole process, you're one of those folks who don't get a lot of attention. Not everybody outside of those of us who are here every day see the work you do, but you've made an outstanding contribution. I want to thank you so much on behalf of all the committees that have had the honour to work with you. May I say how lucky I think the Auditors General have been to have had you in that role. Thank you so much for your service to Canada, to the business of public accounts, and to the work of the Auditor General. We wish you the very long and happy retirement you so richly deserve. All the best.
Some voices: Hear, hear!
The Chair: To begin her time in the salt mines, we welcome Michelle Salvail. Welcome aboard; you're next. We'll see you in the new year.
That exhausts my business prior to the hearing at hand. Unless there are any other interventions I will move us immediately to the matter at hand.
We have of course our Auditor General, Michael Ferguson. We also have the president of the Canadian Northern Economic Development Agency, Janet King.
I will ask each of you as I give you the floor to introduce your delegation and give us any opening remarks you may have.
Without further ado, Mr. Auditor General, you now have the floor, sir.
[Translation]
Mr. Chair, thank you for this opportunity to discuss chapter 6, entitled “Transfer Payment Programs—Canadian Northern Economic Development Agency”, from our 2014 spring report. Joining me at the table is Glenn Wheeler, principal, who was responsible for the audit.
The Canadian Northern Economic Development Agency was created in 2009. It is Canada's first stand-alone entity dedicated to promoting economic development in Canada's three territories.
We examined whether the agency manages selected economic development transfer payment programs in accordance with key requirements of the Policy on Transfer Payments. We also examined whether the agency has established the organization and aligned its resources to carry out its overall mandate.
[English]
Our examination focused on three programs: the targeted investment program, the community economic development program, and the northern adult basic education program. Through contribution agreements with recipients, the agency provides funding for projects that are aligned with the objectives of these programs. As of March 31, 2013, the agency had signed 345 contribution agreements with recipients under these three programs, allocating approximately $100 million to various economic development projects.
We concluded that the agency was implementing a management framework for transfer payment programs and that its assessment of project eligibility was adequate for two of the three programs. However, its administration of agreements was weak. For example, we found that it took, on average, over nine months after an application was received for a contribution agreement to be signed. As a result, some of these agreements were signed late in the fiscal year they covered, and some recipients had only a short period of time to spend funds. Of the 42 agreements we examined, 23 were signed in the last quarter of the year.
We also noted that the agency was not adequately monitoring the contributions it paid out. It was not collecting enough information from recipients to know whether they were complying with the requirements set out in their contribution agreements.
Furthermore, in the 42 agreements we examined, we found that the agency had not received all required reports. For example, about 15% of the reports due for the 2010-11 and 2011-12 fiscal years had not been received. Of those received, about 80% were late, most by several months. The project file showed little evidence that the agency contacted recipients to obtain reports or to do other monitoring such as phone calls or site visits.
[Translation]
As a result, the agency did not know whether the economic development programs were achieving their intended objectives, or whether the funding it provided was making a difference to economic development in the north.
When the agency was established in 2009, the government determined that, as part of its strategy, the headquarters would be located in Iqaluit. However, at the time of our audit, the agency had not been able to fill some key positions in the north, and critical corporate functions continued to reside in the Ottawa liaison office. The agency was updating its human resources plan to guide future recruitment, but it did not have a plan to relocate corporate functions to Iqaluit.
The agency has agreed with our recommendations, and it has prepared an action plan to address each of our recommendations. The committee may wish to contact the agency for its schedule and expected outcomes.
[English]
Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Thank you.
I'm Janet King. I'm pleased to be here today. I've been the president of the Canadian Northern Economic Development Agency, or CanNor, since July this past summer.
With me today is Mr. Mitch Bloom, the agency's vice-president; Mr. Yves Robineau, our chief financial officer; and Mr. Michael Bloor, who is director of operations in Yukon and has been acting director general of operations for the past seven months.
[Translation]
I am pleased to have the opportunity to speak to the committee about the agency and our mandate to advance economic development in Canada's three territories and our management action plan in response to the Auditor General's spring 2014 report.
To begin, I want to thank the Auditor General for his work and note that we accepted all of the recommendations in chapter 6 of his spring 2014 report regarding CanNor's transfer payments program.
Working with partners and stakeholders, CanNor helps develop a diversified, sustainable and dynamic economy across the north. We do this through our contribution programs, the Northern Project Management Office and by conducting policy and research.
[English]
Since its creation five years ago, the agency has taken steps to ensure its programs are operated efficiently and effectively, and we are continuously looking for opportunities to improve. The audit noted a need to improve CanNor's business processes, to implement performance measurement strategies for its programs, and to fully establish its headquarters in Iqaluit.
In response to the audit and to improve the administration of the agency, we have posted detailed information and application forms for our two main contribution programs, the northern aboriginal economic opportunities program, NAEOP, and the strategic investments in northern economic development program, our flagship SINED program. We've also developed new program guidelines and project assessment forms, as well as service standards, for both of these programs.
To aid in the monitoring and reporting on projects, CanNor has developed a correspondence and project monitoring tool. In addition, we've developed a quality assurance tool to reduce inconsistencies in funding agreements and compliance with CanNor's performance measurement strategy.
We've also developed an economic development officer tool kit to better inform our officers and better manage contribution agreements. Between March and May 2014, we conducted comprehensive regional training sessions with all of our economic development officers across the agency and will continue holding these training sessions regularly.
This past July, we completed a risk assessment tool for both SINED and NAEOP. In August we completed the development of a financial control process, and implementation is well under way. At the same time, CanNor completed an internal policy on monitoring of grants and contributions. Finally, this summer, the agency updated its human resources plan and completed both an Inuit employment plan and a strategic staffing plan.
Our management action plan, as tabled to the committee, provides the details and timing of all of these activities.
CanNor is committed to full accountability and excellence in the administration of our services and programs. For instance, CanNor recently redid its suite of four aboriginal economic development programs into a single program that is now called the northern aboriginal economic opportunities program. It was launched on April 1, 2014, and is opportunity-driven, focused on results, and geared toward maximizing economic opportunities for aboriginal communities and businesses in the north. It is simpler to apply for funding under NAEOP, and it's easier to administer, as the program operates with one set of terms and conditions instead of four. We used this program renewal as a catalyst to ramp up our efforts to improve our business and administration processes for project assessments. The same approach was adopted to develop the agency's performance measures. One by one, existing measurement strategies were reviewed and updated to reflect our operational and reporting needs. I am pleased to say that all of our measurement strategies have been renewed, are measurable, and are relevant.
With the new measures are new tools to track results. Each contribution agreement is now entered into a new tracking system and data is gathered on proponent reporting requirements. To ensure that tools like these are used properly, we took the opportunity to update all of our supporting program documentation and implemented training for all of our program officers.
Consistent use of these new tools will improve monitoring of the results achieved from our investments. We will also be examining these tools and processes on a regular basis to make sure they remain current and effective.
As part of our response to this audit, we have now initiated an internal process in which our chief financial officer and his staff monitor our contribution files via spot checks to help identify any emerging issues we might encounter as well as to monitor how these new tools are working.
One observation from the Auditor General is that the process to complete a contribution agreement was long. We took this opportunity to review our business processes and service standards to speed things up. We are consistently meeting our 90-day completion standard, which starts once we receive a complete application for funding.
The new tracking tool for proponent reporting requirements has helped us monitor receipt of reports as well as the often considerable back and forth exchanges it takes to receive these reports. Monitoring using the new tool has shown that we are now consistently applying payment terms and withholding final payment, as needed, should final reports not be received in a timely manner.
I'd also like to talk about what the agency is doing to create a workforce to fully establish its headquarters in Iqaluit.
We have completed a human resources plan, which includes an Inuit employment plan and a strategic staffing plan. These set the agency's overall strategy to recruit and retain a skilled, professional, and diverse workforce with an emphasis on the needs in our Iqaluit office.
We see these tools as essential in what is in fact a very competitive market for talent in the north. One innovative initiative in this regard is the Inuit learning and development pilot project. Working with other federal departments in Nunavut and with Nunavut Tunngavik Inc. and the Government of Nunavut, we provided work experience and learning activities for 12 Inuit participants over a 16-month period. Already we are seeing the benefits of this project and are in the process of hiring some of its graduates.
I'm also pleased to report to the committee that we have recently hired a new director general of operations who is based permanently in Nunavut. We are also in the process of running competitions for key positions in policy, as well as for a manager of finance. As other corporate services positions in Ottawa become vacant, these too will be staffed in Iqaluit.
[Translation]
The agency is making an important contribution to advancing economic development in Canada's north. At the same time, we understand the importance of efficient and effective program delivery, and we are committed to ensuring that we continue to improve our approaches in these areas.
[English]
I would be happy to take any questions from the committee.
:
Measuring economic outcomes is probably one of the toughest things we do in this country. We have our central bank and countless others trying to measure that.
Having said that, when we were created, we started a process of trying to find ways to measure the northern economy, which I assure you is not like the rest of Canada. It is unique. If you visit our website—and I encourage you to have a look—you will see that we have a number of indices that we've actually built in order to follow unique aspects of the northern economy. The focus is not just about gross domestic product and not just about job creation but about earnings in households, knowing some of the socio-economic challenges, and looking at household creation in general.
We try to pull all that together to monitor those. Those are kinds of macro measures we use to follow the overall economy. We do that because, as an agency, as Ms. King said, our job is to follow all of that.
In addition to that, as we also noted in the opening statement, we measure all of our activities on a much more specific level. It would take too long to go through it all, but that's part of the job as well, not just the big picture but the small ones as well.
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We've done several streams of work responding to this particular question, the first being developing detailed program information for the two programs I mentioned earlier, the northern aboriginal economic opportunities program and the strategic investments in northern economic development. We worked through them in great detail to be able to post on our website complete information about the programs and to share that.
We also redeveloped very detailed program application forms for both of those, updated and aligned with the program guidelines themselves. They were completed and posted in the spring.
We developed new program guidelines and the associated project assessment forms for the two programs—consistent, modern, and aligned with all the new guidelines—for our economic development officers as well. That was completed in July.
I will note that I can update one piece from the table that we submitted to the committee. It did say that the SINED program guidelines would be completed by November 2014. I can report that those have now been completed. That's another piece that has been completed.
In terms of another significant aspect, our program officers work across the north, with individuals in Iqaluit, Yellowknife, and Whitehorse. We needed to make sure they were up to date and well informed on all of these changes and the new tools. We conducted very comprehensive training and planning sessions for our officers regarding the program renewal rollout and implementation so that they were enabled to make these things work well. Those were completed in the spring, in March to May of 2014.
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But you didn't have any responsibility for the agency prior to that. It's how I framed the question; in other words, my intention would not be to ask you what happened before if you weren't there. That's why I wanted you to clarify that you didn't perhaps have another position inside, so I could ask you to review the question in that way.
Let me take you to page 19 of the Auditor General's spring report, chapter 6, under 6.77. I'll read the first half and I will give a quick quote from the bottom. It says:
The Canadian Northern Economic Development Agency has not managed and delivered selected economic development transfer payment programs in accordance with key requirements of the Policy on Transfer Payments. The Agency’s administration of contribution agreements is weak, monitoring of recipients is inadequate, and the Agency has not measured and reported on whether its programs are achieving their objectives.
I don't think that's a standout recommendation of an agency that's performing well.
I will go on to say, because the Auditor General did say it in the chapter, and I know that my friends across the way will point to it, but let me do it first:
However, the Agency has begun to address these issues. In 2012....
It goes on to talk about how those issues were addressed.
In your limited time there you seem to have made efforts to implement some things. I recognize it is a very short period of time, Ms. King. July to December is not a very long period of time to try to measure in comparison to what really was—if one has to give it a grade—about a D minus for the first half, obviously before you arrived prior to 2012.
Where do you see yourself now in that transition to perhaps getting closer to a passing grade?
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Thank you, Mr. Chairman.
I want to thank our guest today for coming and for answering our questions.
There are lots of questions with regard to this report. I'm going to start with section 6.35. In this section you mention that for some contribution agreements that were given out, paperwork was not completed or filed on time, and there was lack of adequate tracking. I know you have already spoken to some of these pieces but I'm using this as a segue into where I'm really going with this.
Where I'm going is from 6.35 to 6.53. In 6.53 it says that CanNor “has affirmed that values and ethics are important in the administration of grants and contributions.” Well, first of all we're looking at the ethics piece and we're also looking at the piece where much of the paperwork was not filed and there was an inadequate tracking system.
On the very day I think the report was released I also submitted through the order paper in the House of Commons a question on the number of contracts given by CanNor that were under $10,000 for the period of about a year that was ending in 2014. So it would have been around the same time that the rules around the ethics portion of this was being reaffirmed. What I noticed were several things.
First of all, I noticed there was a company that was given a contract for speech writing services. It was an Ottawa-based firm by the name of Don Cummer and Associates. This particular company has also been a long-time high-level donor to the Conservative Party of Canada in a number of election campaigns, not just one.
My question is in terms of looking at the values and the ethics and the administration of the grants and contributions of CanNor. How does it fit when those contracts are being awarded to long-time contributors to the Conservative Party?
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I always find interesting, when I read an audit, not what the audit says but what it doesn't say. What it doesn't say is often identified by the things it does say.
The conclusion on page 19 is very clear that the weaknesses identified by the audit come in the form of administration, monitoring, measuring, and reporting. It doesn't talk about the effectiveness of the program. I think that's a very important part to note: the effectiveness of the program wasn't audited, but the administration end of it was, and there were some weaknesses identified.
There were some recommendations made to the department. I commend the department. One of the first changes the department made, obviously, was to hire a new president. I think the department is moving in the right direction there.
I would like to just follow up with some of the progress that has been made on the recommendations identified in the audit. I'll look specifically at the fourth recommendation. I'll read it and ask you and perhaps your colleague Mr. Bloom to comment on it:
The Canadian Northern Economic Development Agency should document its recipient and project risk assessments. It should also define appropriate levels of monitoring and reporting to be specified in contribution agreements, proportionate to recipient and project risks.
Can you comment on that and tell me what the department is doing with that recommendation?
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I will look to my colleagues who have been deeply involved over the last number of years. As for major accomplishments, I think as we have heard here today, I've a strong track record of working with partners and communities: partner governments, partner communities, partner individuals to review and work with proposals for advancing economic development across the north.
Michael was saying that one of the reasons we can move forward is that we work so closely with people who wish to advance economic development in the north. That track record of investing in diverse economic development opportunities is quite significant.
A second item hasn't been raised by the committee here today, but early in its five-year tenure CanNor was also tasked with setting up and implementing the northern projects management office, which is working to facilitate the passage of major projects through the regulatory systems in the north and set that up in just a couple of years. It too is proving to be highly effective in coordinating and facilitating very efficient, timely movement through the regulatory system, again with the partnership of first nations, territorial governments, and all decision-makers. That also has a very strong track record, and I think we can see commendation from governments, the communities, and the private sector itself.
Those are two very strong tracks.
We also have a third element. We do policy research and analysis that allows us to more deeply understand the issues, some of which we've talked about at committee today, substantial issues facing northern development. Part of our role is to advocate on some of these issues in an informed and deeply analytical way to policy decision-making and policy advice in Ottawa. We've also brought significant, and I like to think deep, understanding of northern challenges and issues to diverse tables and diverse discussions with our colleagues in the federal government.
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I'm going to look it up because this is aligned with our RPP, and I just want to make sure I am very complete.
Our theme going forward is building a strong north together. I'll speak to the building part but I will emphasize again the “together”. Almost everything we do is in partnership with the territorial government and with many communities and individuals across the north.
Our priorities include community development, working with those communities so they can be ready for and engage in and continue to develop economically.
A key part of that also, might I add, is the capacity side of community development. We have diverse engagement, whether it be through our Gs and Cs or our work as individuals with communities across the north to help them build the capacity to take on further and more mature economic development.
On enabling infrastructure, I think, as noted in the early part of the report, infrastructure in the north is needed. We work greatly with communities and government levels to try to enable infrastructure development in the north across a wide variety of fronts, and to engage a skilled northern workforce, whether it be through our northern adult basic education program or a diversity of other engagements. We work closely with the northern community colleges as well to try to enable a skilled northern workforce that's ready to participate in this emerging northern economy.
Those are our three priorities going forward.