PACP Committee Report

GOVERNMENT RESPONSE TO THE THIRD REPORT OF THE STANDING COMMITTEE ON PUBLIC ACCOUNTS, ENTITLED CHAPTER 7, “SPECIAL EXAMINATIONS OF CROWN CORPORATIONS-2008”, OF THE SPRING 2009 REPORT OF THE AUDITOR GENERAL OF CANADA

Introduction

The Government of Canada is pleased to respond to the Third Report of the House of Commons Standing Committee on Public Accounts, entitled Chapter 7, “Special Examinations of Crown Corporations- 2008”, of the Spring 2009 Report of the Auditor General of Canada.  The Government agrees with the recommendations of the report and is committed to addressing the observations and recommendations made by the Standing Committee and the Auditor General of Canada.

The Government has carefully reviewed the recommendations in the Standing Committee’s report, a number of which have been, or are in the process of being addressed by actions taken by the Great Lakes Pilotage Authority and VIA Rail Canada Inc.  The Government welcomes the opportunity to respond to each recommendation.

That the Minister of Transport continues the government’s efforts to amend the Great Lakes Pilotage Regulations, as proposed by the Great Lakes Pilotage Authority.

and

Recommendation 2

That the Great Lakes Pilotage Authority report to the Public Accounts Committee by 31 March 2010 on the progress of adopting amendments to the Great Lakes Pilotage Regulations.

The Government concurs with the Standing Committee’s recommendations.  Due to the fact that the Standing Committee’s report was tabled in the House of Commons on March 29, 2010, it was not feasible to provide the Standing Committee the requested progress report by March 31, 2010.

The Great Lakes Pilotage Authority and Transport Canada are collaborating to draft amendments to the Great Lakes Pilotage Regulations to address the deficiency identified in the special examination.  The objective is to pre-publish the proposed amendments in the Canada Gazette Part I in Fall 2010, with the aim to have them enter into force in 2011.

The proposed amendments would enable the Great Lakes Pilotage Authority to better assure that Canadian Masters and Deck Watch Officers have the required local knowledge to navigate their vessels in the waters of the Great Lakes region.  Under the proposed new regime, and after a two-year transition period, all Domestic Officers would be required to hold a valid Pilotage Certificate, which will be issued by the Authority in compliance with the Pilotage Act.  To obtain this certificate, Domestic Officers would be required to successfully complete a training program approved by the Authority or pass an examination which would be administered by a Board of Examiners as set out in the Great Lakes Pilotage Regulations.  During the two-year transition period, and after due verification of credentials, the Pilotage Authority would issue Pilotage Certificates to experienced Officers.

The Government is confident that the implementation of the Pilotage Certificate regime in the Great Lakes will meet the Auditor General’s high standards as well as meeting the high safety and environmental standards expected by Canadians.

That the Great Lakes Pilotage Authority provide a plan to the Public Accounts Committee by 31 March 2010 of how the Authority intends to eliminate its cumulative deficit and maintain financial sustainability.

The Government concurs with the Standing Committee’s recommendation.  Due to the fact that the Standing Committee’s report was tabled in the House of Commons on March 29, 2010, it was not feasible to provide the Standing Committee the requested plan to eliminate the Great Lakes Pilotage Authority’s cumulative deficit and to maintain its financial sustainability, by March 31, 2010.

The Summary of the Great Lakes Pilotage Authority’s 2010-2014 Corporate Plan, which was tabled in Parliament on April 12, 2010, forecasts the Pilotage Authority to return to a positive cash flow by 2014 through cost containment and efficiency improvement measures, and through raising tariffs in a controlled manner.  This plan is supported by the Authority’s customers and their representatives.  The 2010-2014 Corporate Plan Summary is available on the Great Lakes Pilotage Authority’s website.

As indicated in its Corporate Plan Summary, the Great Lakes Pilotage Authority took drastic measures in June 2009 when it reduced its workforce by 15% and deferred wage increases, training expenses and other costs.  As well, the Authority has worked directly with its stakeholders to review required levels of service.  This exercise has resulted in an increase to the temporary tariff surcharge from 6% to 15% on all assignments after August 18, 2009, which will continue until December 31, 2010. 

The Great Lakes Pilotage Authority monitors its financial situation closely and will adjust its plans as necessary to ensure a return to a positive cash flow by 2014.  Given that marine volumes are difficult to forecast, and have been notably volatile in recent years due the global economic recession, the Authority is making further allowance for traffic variations when setting tariffs.  The Great Lakes Pilotage Authority also regularly examines the composition of shipping traffic and reviews its tariff structure accordingly to ensure that it achieves the appropriate level of revenue by ship class and district.  This review of traffic composition has been performed over the last three years.

The Great Lakes Pilotage Authority will continue to work with all stakeholders, including customers, service partners (such as the St. Lawrence Seaway Management Corporation), and Transport Canada to obtain the most accurate and reliable information so that reasonable forecasts of traffic and financial position can be done.

 That VIA Rail Canada Inc. provide the Public Accounts Committee with a progress report by 31 December 2010 of actions taken to implement the Auditor General’s recommendations contained in the 2008 Special Examination.

The Government concurs with the Standing Committee’s recommendation.  VIA Rail Canada Inc. will provide the Standing Committee with a report of actions taken to implement the Auditor General’s recommendations contained in the 2008 special examination by December 31, 2010.

VIA Rail Canada Inc. is working diligently to address all the points raised in the special examination.  Of the 14 recommendations in the special examination, VIA Rail Canada Inc. has already completely addressed nine, including the renegotiation of Train Service Agreements with Canadian National and Canadian Pacific Railways.  Of the remaining five, four will be completed by the end of the year as follows:

• The components of the Environmental Management System that were not fully operational at the time of the special examination will be implemented by the summer of 2010.  
• A maintenance productivity system has been implemented which will make it possible to measure the productivity of each of VIA’s maintenance activities.  Data is currently being gathered to establish benchmark standards to which future data, which will be gathered from maintenance activities, will be evaluated.  The data gathering is to be completed by fall 2010.
• The marketing and sales groups will be amalgamated in the summer of 2010.  The compensation method for the new group will be studied once the amalgamation is completed.
• A Security Program has been developed with the objective to identify and prioritize required initiatives to reduce security risks that could affect confidentiality and the integrity of VIA’s systems.  The Information Technology management framework has been reviewed, and continues to be reviewed in accordance with the elements of ISO 27002 standards.  As a result, a security system action plan has been developed.  Depending on progress with contractors this should be completed by end of 2010.

Work on the final recommendation, which calls for VIA Rail Canada Inc. to implement a new yield management system to establish the price of its fares, is well underway.  VIA Rail Canada Inc. expects the contract for this work to be let in the fall of 2010, and the new system will be fully functional in 2011.

 That VIA Rail Canada Inc. specifically outline in its progress report the steps that have been taken to assess and put in place measures to mitigate risks and threats to its information technology systems.

The Government concurs with the Standing Committee’s recommendation.  VIA Rail Canada Inc. will include the requested information in its report to the Standing Committee.

VIA Rail Canada Inc. has completed an information technology strategic plan that prioritizes its information technology projects.  The plan is reviewed regularly to ensure that governance is exercised when prioritizing information technology projects and to reassess risks, and to ensure appropriate measures are in place to mitigate risks and threats to the information technology system.   A Security Program has been developed with the objective to identify and prioritize required initiatives to reduce security risks that could affect confidentiality and the integrity of VIA’s systems in line with the special examination finding.  The Information Technology management framework has been reviewed, and continues to be reviewed in accordance with the elements of ISO 27002 standards.  As a result, a security system action plan has been developed to mitigate risk.  Depending on progress with contractors this should be completed by end of 2010.

That VIA Rail Canada Inc. outline in its progress report how much money has been spent on improving infrastructure and refurbishing stations on the Windsor Quebec corridor, as well as what projects have been completed and what projects remain to be completed.

The Government concurs with the Standing Committee’s recommendation.  VIA Rail Canada Inc. will include the requested information in its report to the Standing Committee.

The Corporation’s capital budget, which includes funding for the Quebec-Windsor corridor, totals $923 million and extends through to 2013.  Major multi-year contracts have been awarded to upgrade track, signals, highway crossings and stations in the Quebec-Windsor corridor and to renew locomotives, passenger cars and information technology systems for the entire VIA network. 

Recommendation 7

That VIA Rail Canada Inc. provide in its progress report information on the status of its plans for increased ridership and revenue.

The Government concurs with the Standing Committee’s recommendation.  VIA Rail Canada Inc. will include projections for ridership and revenue in its report to the Standing Committee.  These projections will reflect the impact of the recession that began in 2008.