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Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 15:32
Thank you.
Mr. Chair, I'm pleased to present our Spring 2015 Reports, which were tabled in the House of Commons yesterday.
I'm accompanied by Nancy Cheng, assistant auditor general; Joe Martire and Frank Barrett, principals; and André Côté, director.
We have presented seven audits that we completed since last fall. Some of the audits included in our Spring Reports were led by assistant auditors general Ronnie Campbell and Wendy Loschiuk, both of whom retired this past month. I want to take this opportunity to thank them for their contribution to the office. I would also like to acknowledge the contribution to the performance audit practice of Neil Maxwell, assistant auditor general, who will retire in June.
As you will see, some of the audits that we are talking about today highlight government activities that are not delivering their intended results for Canadians, and where there's a risk that the underlying issues could get worse if they're not addressed quickly.
First, let's look at our audit of antimicrobial resistance. Data shows that some drug-resistant infections are on the rise in Canada. Already, in hospitals alone about 18,000 Canadians contract resistant infections every year. We found that Health Canada and the Public Health Agency of Canada have not done enough to help contain the proliferation of drug-resistant organisms. Health Canada has not taken some important steps to protect the effectiveness of antimicrobials used for treating serious infections in humans.
Though the department requires a prescription for the human use of these drugs, prescriptions are not always required for their use in food animals. The imprudent use of antimicrobials in food animals can lead to the spread of drug-resistant organisms through the food chain. Health Canada is aware that there are gaps in the regulations that make it possible for farmers to import unlicensed antimicrobial drugs and active pharmaceutical ingredients for use in their own animals, but the department has not acted to strengthen the control over their importation.
We also found that the Public Health Agency of Canada is not collecting all of the surveillance information needed to understand the scope of antimicrobial resistance in Canada. In 1997, the federal government first articulated the need for a pan-Canadian strategy to address antimicrobial resistance. This was reiterated in 2009 and the agency acknowledged that stronger leadership was needed. However, there was no provincial or territorial consensus on what the Public Health Agency of Canada's role should be. There is currently no national strategy in place and in our view it will likely be many years before there is one.
Continuing on the topic of health, we also looked at what Health Canada has done to support first nations' access to health services in remote communities.
Health Canada has an objective of providing first nations individuals living in remote communities with access to health services that is comparable to that provided to other provincial residents living in similar locations. We found that the department has not achieved this objective.
In most cases, access to health care in these communities is initially provided through nurses deployed in nursing stations. We found deficiencies in the way nursing staff and stations are managed. For example, only one of 45 nurses included in our sample has completed all of Health Canada's mandatory training courses.
We also found that Health Canada had not addressed 26 of 30 health and safety or building code deficiencies present in the eight nursing stations we examined. Deficiencies ranged from malfunctioning heating and cooling systems to unsafe stairways, ramps, and doors. Health specialists cancelled visits to one community because they could not stay in the residence intended for their use due to issues with the septic system dating back more than two years.
In another audit we focused on whether the Canada Border Services Agency has managed its information technology investments to ensure its projects meet their objectives. The agency's current portfolio is made up of 30 information technology projects, with a budget of more than $1 billion.
In December 2013, the Canada Border Services Agency put in place a portfolio approach to strengthen the management of its information technology investments. We found this approach was comprehensive; however, a review of five projects against the new framework showed it was not being fully applied. For example, the information provided to senior committees tasked with overseeing the information technology project portfolio did not contain accurate financial information, project status information, or timelines. As a result, the agency faces significant challenges in managing these projects, sometimes resulting in duplication of effort or projects being delivered late.
Let's turn to our audit of tax-based expenditures. The total of tax-based expenditures accounts for billions of dollars annually. These expenditures are similar to direct program spending, we found that less information is provided to Parliament about tax-based expenditures than about direct program spending.
We found that Finance Canada does a good job of analyzing new tax measures and of monitoring existing ones. However, Finance Canada does not systematically evaluate tax-based expenditures to ensure that they continue to achieve the intended results.
We believe that Parliament needs comprehensive and consolidated information about tax-based expenditures to understand not only total government spending, but also what money spent through the tax system is accomplishing.
In our audit focusing on how the Correctional Service of Canada prepares non-aboriginal male offenders for safe re-entry into the community, we found that offenders are seeing more of their sentences in custody and spending less time under supervision in the community.
In 2013-14, about 1,500 offenders were released directly into the community from medium or maximum security penitentiaries without the full benefit of a gradual re-entry into society. Eighty per cent of offenders were incarcerated beyond the time that they first became eligible for parole even though many were considered to be at low risk to reoffend. We also found that in many cases offenders were not receiving correctional and rehabilitation programs prior to becoming eligible for release. Many offenders were not assigned to these programs while in custody, despite having histories of criminal associations or substance abuse.
Let's turn our attention to our audit focusing on the recurring reports that are required of federal organizations by the Treasury Board of Canada Secretariat, the Public Service Commission, or legislation. We found that, for the most part, reporting intended to support accountability, and transparency was serving its intended purposes. However, in our view, the efficiency and value of government reporting should be improved.
We also found that some Treasury Board of Canada Secretariat reporting requirements applied equally to all organizations, regardless of their size or mandate. For example, the Canadian Polar Commission—a small organization with 11 staff members—was required to prepare 25 annual or quarterly reports.
We also found that about half of departmental security plans, which were due by June 2012, had not been finalized at the time of our audit.
Our audit of the Office of the Ombudsman for the Department of National Defence and the Canadian Forces covered the period of February 2009 to August 2014, coinciding with the terms of two different ombudsmen. We found that, during the tenure of the first of these two ombudsmen, the office had in place inadequate controls for managing finances, contracts and human resources in compliance with government rules and policies.
In addition, existing controls were often overridden by management.
We also found that the first of the two ombudsmen and some senior managers did not respect the Values and Ethics Code. This resulted in grievances, complaints and high levels of sick leave and turnover. These issues, combined with a lack of standard procedures contributed to delays in processing investigations. After 2012, the workplace environment stabilized, and efforts to close long-standing files were successful.
National Defence's monitoring was insufficient to ensure that government rules and policies were being followed in the ombudsman's office, and the department did not fully address employee complaints about workplace issues filed from 2009 to 2013.
Since the ombudsman's office investigations are carried out independently from National Defence, but the office staff and budget reside with the department, the organizational relationship with National Defence is a complex one that needs to be better defined to ensure adequate monitoring in all areas.
In 2014, our office performed special examinations of the Canada Lands Company Limited and the Royal Canadian Mint. Though we did not identify any significant deficiencies, we did note some areas of concern relating to the Royal Canadian Mint's contracting practices and management of travel and hospitality expenses.
Of the seven audits we have reported on, some highlight government activities that are not delivering their intended results for Canadians, and there is a risk that the results could get worse. The national strategy to address antimicrobial resistance is one example. Almost 20 years after the government identified antimicrobial resistance to be a public health priority, there is still no national strategy in place.
Our audit of the Correctional Service of Canada is another example where it is evident that fewer offenders are getting the benefit of a full gradual release back into society.
We're concerned that the issues we're seeing today may be the symptoms of bigger problems in the future if they're not resolved quickly. It's important for departments to focus on addressing these issues promptly to avoid bigger problems, which will cost more to fix down the road in time, money, and effort.
Mr. Chair, that concludes my opening statement.
We will be happy to answer any questions you may have.
Thank you.
View Jay Aspin Profile
CPC (ON)
Thank you, Chair.
Welcome, Mr. Ferguson and your team, to our committee.
I'm going to focus on chapter 7, which is on the office of the ombudsman for the Department of National Defence and the Canadian forces.
In chapter 7 you concluded that the:
Office of the Ombudsman for the Department of National Defence and the Canadian Forces...had inadequate controls for financial management, contracting, and human resource management in carrying out its mandate....
In your remarks, on line 27, you state:
After 2012, the workplace environment stabilized, and efforts to close long-standing files were successful.
Can you speak to how these issues are being addressed under the current ombudsman?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:21
There still is a lack of clarity in terms of the line on the roles and responsibilities between National Defence and the office of the ombudsman. This issue is important because the ombudsman's office needs to have the independence to conduct its investigations. The investigations that it's doing are about complaints that members of the military, or their families, or civilian employees of National Defence have about the operations of the military or National Defence. The ombudsman's office is the way that those employees have to get their concerns dealt with, so the ombudsman's office needs to have independence to conduct those investigations.
On the other hand, all of the staff and the budget for the ombudsman's office come from National Defence, so National Defence has a responsibility to make sure that the hiring rules are respected, that the financial management rules are respected, and that values and ethics are respected. They have to do monitoring of the ombudsman's office to make sure those administrative rules and roles function properly.
You can see that, almost by definition, there's a push-pull between those two things, where National Defence has to monitor the ombudsman's office, but the ombudsman's office has to do independent inquiries into National Defence's activities.
We certainly did find that the problems were at their worst between 2009 and 2012. There were some actions that were taken in the latter part of 2012 into 2013 to try to resolve the issues. The investigations started to be completed on a more timely basis again, but there still are some places where the roles and responsibilities are not totally defined. It's important to make sure that the inquiries can be done independently but that there can also be appropriate oversight of the management and administration of the ombudsman's office.
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:23
That's right, and I'm concerned that National Defence needs to find a way to monitor the administrative part of the office of the ombudsman, to make sure that the financial contracting and human resource rules are being followed and being respected, but not be doing it in a way that gives people the perception that National Defence is using that as a way, somehow, to perhaps impede the independence of the investigations.
It's a very complex relationship. Trying to protect, both respecting the rules but also respecting the independence of the investigations, needs to be sorted out.
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:24
I think, again, we identified in the audit that in the latter part of 2012 we saw that things had started to improve, both in terms of investigations and in terms of what was happening in the workplace. I think, though, there is still some education that needs to be done and some systems and controls that need to be put in place to make sure there are good financial controls in the office of the ombudsman. That's why we've made the recommendations again that National Defence and the ombudsman's office have to sort out those roles and responsibilities. There's still some work to do there.
View Alain Giguère Profile
NDP (QC)
Thank you, Mr. Chair.
In the report on the ombudsman, it seems clear that, between 2010 and 2013, the service was not operational in terms of administration, or was at least limited in its ability to meet its commitments. If we look at all the points you put forward, the situation seemed to stem from a work environment that could be described as toxic.
How is it that a service could perform so poorly for three years without the Department of Defence or another entity telling the senior officials responsible for the bad conditions and work environment to remedy the situation quickly? The working conditions clearly deteriorated over those three years without the senior officials making any changes.
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:50
I understand your question and I'm in the process of answering your question.
In paragraphs 7.71, 7.72, and 7.73, we talk about the fact that National Defence did in fact undertake some investigations. Some of those complaints were brought forward to them. They had to undertake some investigations into those, but they didn't do them appropriately. If those investigations into the complaints had been done appropriately, it could have perhaps prevented or fixed these types of problems earlier rather than when they were fixed. I think it was a case of just not having the right practices for dealing with the complaints in place.
View Alain Giguère Profile
NDP (QC)
Mr. Auditor General, it is especially troubling to see that the period during which that service was performing poorly coincided with the period when many female members of the Canadian Armed Forces complained about being sexually harassed on one or more occasions.
In paragraph 7.8, you say that you examined those activities.
Did you check which cases took the most time to be resolved and whether they were processed correctly? If poor working conditions resulted in unreasonably long processing times, was the quality of the processing of those files also affected?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2015-04-29 16:53
I don't have the information about the exact types of investigations that were being undertaken. Certainly when you look at the ministerial directives, we are saying that the office the ombudsman should try to resolve issues within 60 business days, but many of these—I think we identified 122—were taking more than two years to resolve. This situation was such that the investigations were just not getting done, and they are important investigations. This is an important service to members of the armed forces and civilian employees of National Defence.
Don Head
View Don Head Profile
Don Head
2015-02-17 9:27
Thanks. It's a really good question.
I think a couple of points are worth noting. There are sort of three types of individuals we need to deal with.
There are those individuals who come into the system and have literally no employment history or employment skills at all. In some cases, it's about giving them an assignment that gets them to get up on time, go to a certain place, stay there for the required number of hours, perform whatever tasks there are, and then repeat that. As you can appreciate, there's a segment of our population that does not have a work ethic, and trying to instill that is part of some of the tasks we have. For example, when we assign somebody to what we call “range cleaners”—cleaning on the ranges in the institutions—it's partly to address that issue.
We also have individuals who come in and have had an off-and-on employment history. It's about trying to find out what it is that's causing them to not keep a job when they've been in the community. Sometimes that's about upping their level of education. Sometimes it's about giving them a different set of skills that are more applicable in the community today. It's about trying to match those kinds of things.
Then we have other individuals who have had good employment histories, and some of those individuals are individuals we use in some of the higher-level shops that we have, for the productivity piece.
There is no question that we do not have exactly the same kinds of opportunities in every institution across the country, but we try to narrow down the needs that we are going to address for the short period of time we have. As you can appreciate, one of the challenges for individuals who have short sentences and are relatively young is that we're not going to change their lives overnight, so it's about trying to get them steered in the right direction.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:15
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?
Janet King
View Janet King Profile
Janet King
2014-12-04 16:18
I'm unable to speak to the specifics of the particular example that you provide but I can say that all contracts given by CanNor certainly follow the rules and procedures of contract implementation.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:18
Well, according to the findings that were written in the Auditor General's report there were a number of inadequacies that weren't followed within CanNor.
This is not the only example of the list that I recovered, where there have been long-time contributors to the Conservative Party who were given contracts by CanNor, contracts that were signed off, from what I understand, by the minister. In fact, one of those contracts was to a company called True North Properties Group and the company president was Mr. Birrell, who had directly donated to the minister's campaign.
So I'm not sure how the ethics piece measures up in CanNor if direct contracts and services can be given to all of these groups who are long-time donors to either the minister who is responsible or the Conservative Party.
Janet King
View Janet King Profile
Janet King
2014-12-04 16:19
Again, I would just like to note that with respect to any contracts provided by CanNor we routinely and consistently follow government contracting procedures. Most, if not all—I can check with my colleagues—of our contracts are done through standing offer, so groups that have been cleared to provide contracts.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:20
In the report it states the following:
The Agency has affirmed that values and ethics are important in the administration of grants and contributions. This is particularly so for the Agency because in small northern communities, there is a higher risk that an employee, family member, or friend of the employee may be able to benefit directly or indirectly from the funding provided. In 2013, the Agency issued its Values and Ethics Code of Conduct. We found the Code to be consistent with federal government requirements.
Someone should be able to tell me: is it an ethical practice of your agency and all other agencies in government that any company directly donating to the governing party and to the minister responsible in that agency would be contracted services?
Janet King
View Janet King Profile
Janet King
2014-12-04 16:21
Again, it is my view that, as long as government procedures and rules are followed, it would fall within our values and ethics.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2014-12-04 16:21
Thank you, Mr. Chairman.
Thank you to our witnesses for attending here this afternoon.
I have a line of questions I want to ask, but before I do that I just want to respond to my Liberal colleague's comments a little bit.
In 2006 our government passed the Federal Accountability Act that banned corporations and unions from making donations to any political party in an effort to get rid of the big money involved in politics. The member opposite here has directly stated that there was a company that donated to the Conservative Party, which is an inaccurate statement. It has to be an inaccurate statement, because companies—
Voices: [Inaudible]
Mr. Ted Falk: No. Companies—
View Alain Giguère Profile
NDP (QC)
Thank you, Mr. Chair.
My first question is a quick one for Mr. Ferguson.
I quickly re-read your document, but nowhere did I see that you had pointed out or observed a problem with misappropriation or ethics. Was that not part of your review of this agency?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2014-12-04 16:27
No, the types of things that we identified were not getting reports, not following up on what was spent, what was planned to be spent, and that sort of thing. The issues that we were raising were simply that the agency didn't have the information to really be able to monitor some of the grants that it gave out.
View Yvonne Jones Profile
Lib. (NL)
View Yvonne Jones Profile
2014-12-04 16:37
Thank you. I have some more questions on section 6.53 regarding the ethics piece.
Mr. Ferguson, your report stated that a new values and ethics code of conduct had been developed. It also stated that this agency received application forms that were empty or missing lots of data, and that the agency determined those were acceptable and approved them. We know that now.
I also know, from information I've obtained through the House of Commons, that there were contracts with companies, the presidents of which were long-time donors to the Conservative Party. Under the values and ethics code of conduct, which you had reported on in this particular document, is this acceptable?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2014-12-04 16:38
Certainly we would expect the agency to follow the code of conduct and the rules on contracting. It's important to recognize as well that this audit was not an audit about the contracts that the organization put in place; it was an audit of the grants and contributions program.
In terms of the values and ethics code of conduct, through the audit we identified that in 2013 they were implementing this code of conduct. Certainly we identified what I would consider to be significant issues with the administration of some of the programs around grants and contributions, and we brought those forward. We also identified that in 2013 they started to put in place a management framework that included the values and ethics code of conduct. From that point of view, we were not satisfied with the way they were processing things, but we did find they were starting to make some steps towards improving that.
View Stephen Woodworth Profile
CPC (ON)
Thank you, Mr. Chair.
Mr. Ferguson, there is unfortunately a trend in some circles today, when policy cannot be criticized, to smear reputations and to insult the ethics of people in government. It is done with sly innuendo and rumour. Quite frankly—not that it matters to anybody else here—it disgusts me more so because the victims are unable to publicly defend themselves.
I'd like to ask you what I believe and hope is a categorical question, and for which I hope it's capable to have a yes-or-no answer. Having examined a number of projects of this agency, can you point me to any evidence in your report that demonstrates that any single one was conducted in a manner that violated the values and ethics code of conduct of this agency?
Michael Ferguson
View Michael Ferguson Profile
Michael Ferguson
2014-12-04 16:54
We didn't audit specifically the value and ethics code. What I can say is that we did not see any evidence that concerned us that there was any wrongdoing in any of the files we looked at.
But I can't answer your specific question on whether all the attributes of the code of ethics were followed, because that wasn't a specific part of the audit.
View John McKay Profile
Lib. (ON)
Chair, you'll be interested in knowing that due to the efforts of the Ontario government, Toronto has not had a smog day in two years, largely attributable to the elimination of coal-fired generation. There are other reasons, but that's one of the reasons. I personally hope you continue to have an environment file.
My question is first to the folks on the Industrial Design Act. There's a section in the act that is a morality clause. You can't register something that's contrary to public morality or order. However, the Patent Act does not have a parallel clause. I wonder how those two concepts are going to be reconciled.
Denis Martel
View Denis Martel Profile
Denis Martel
2014-11-06 10:06
In answering this question I want to make sure that we understand what industrial design is. It's the registration of the visual features of a particular object. So it could be the shape of a bottle. It could be on shoes. For example, Nike has registered its design on running shoes. It's on the side, a particular pattern. So it has a visual appeal essentially.
The clause you're referring to in the bill is clause 104. Essentially it's a rework of a requirement that is in the current act, so it's not something that is being added; it's just a repackaging of the current requirements. I want to make clear that we're not doing this.
View John McKay Profile
Lib. (ON)
I'd dearly love to pursue that, because it seems to me that there's a huge contradiction there and I would think that any member of this committee would be interested in reconciling that contradiction so that we do actually put out a message in both pieces of legislation that matters pertaining to public morality are of serious concern, but the way we're rushed is the way we're rushed.
Agnès Lajoie
View Agnès Lajoie Profile
Agnès Lajoie
2014-11-06 10:09
If you'd allow me to mention, up until late 1989 the Patent Act had restrictions. There was restricted patenting of an invention that has an illicit object in view. At the time when we amended the Patent Act in 1989, the legislator decided to remove this requirement, which was, to the best of my knowledge, never used and never challenged in court.
Again, as my colleague was mentioning, the criteria for assessment that the patent office uses really focus on the technical and on the contributions of an invention, which are novelty, obviousness, and of course utility.
View Robert Chisholm Profile
NDP (NS)
Could you explain for me a little bit more about this business of public morality. What does that mean as it relates to this business?
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 15:50
Under the GATT 1994, article XX sets out a number of reasons why a WTO member could impose an import ban or some similar measure, why they could ban the import of certain products. It's a list of six or eight different circumstances or situations. It deals with things like prison labour goods that are.... The first one on the list, article XX(a), concerns products that are injurious or inconsistent with public morality.
So the EU has cited this provision, article XX(a), as a legitimate basis for it to ban the import of seal products. So it has said, on the one hand they have an outright ban of such products, and on the other hand, they have, as I mentioned, established three exemptions from that ban. So products that are harvested by Inuit people, products that are harvested for marine mammal conservation reasons, or goods that are carried in by travellers through airports or whatever.
So the flow of goods from Greenland to the EU, as was mentioned, is allowed by virtue of the first exemption, that related to harvesting of seals by Inuit people. The entire Greenlandic seal harvest, not surprisingly, is done by Inuit people.
View Robert Sopuck Profile
CPC (MB)
I'm astonished to hear that. That is clearly stupid and malicious behaviour by the EU, meddling in the management of our natural resources. I find it absolutely appalling that they are going down this particular path.
In terms of the use of this ridiculous public moral concern clause, what are the possible precedents that have been set for the trade in other commodities?
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 16:03
That is an important point. Actually, we are quite concerned about the possible precedent of the panel's findings in this regard. It was one of the grounds of our appeal of the panel's conclusion concerning the interpretation. Application of GATT article XX(a) was a particular concern. Specifically, we argued that the panel failed to support its conclusion that the seal regulation could be justified. It was shared by Norway, and as I said, a number of other third parties in the appeal.
Basically, the concern is that the panel, through its ruling in its report of last November, has set a very low threshold for the invocation of a public morals defence, creating the possibility that a broad range of issues could potentially be recast as moral issues, and potentially be justified under the exemption.
Beyond that, I can't point to specific products that we think might be vulnerable. It's more the precedent of a low bar, and other parties potentially citing that and saying they could do the same thing with something else.
Kevin Thompson
View Kevin Thompson Profile
Kevin Thompson
2014-04-07 16:09
To my knowledge, it's been invoked in at least one other case involving gambling laws in the United States. I believe it was Antigua that challenged a number of restrictions on cross-border gambling. The U.S. sought to justify those restrictions under the public morals defence. There is a fair amount of WTO jurisprudence under GATT article XX, the general exceptions, generally and specifically in relation to this idea of necessity.
In looking at the general exceptions, there are various components to the test. The first one is that you have to establish that the measure is there to protect something. Is it protecting public safety, protecting public morals, protecting human health, protecting animal welfare, or protecting the environment? There's this notion of protection.
The second step is this idea of necessity. Is the measure necessary in order to achieve that objective of protecting, in this case, public morals?
Then you have this third step, which falls within something called the chapeau where, nonetheless, one has to determine whether the measure has been applied arbitrarily or in an unjustified manner.
There's a significant amount of jurisprudence around the general exception test itself.
View Lawrence MacAulay Profile
Lib. (PE)
Thank you very much, and thank you for your determination to be here.
Public morality, and I know you've been talking about it, how is it established? If I understood correctly, you're dealing with conservation and cruelty. It is truly a fact that our seal herds are much higher, I believe, than they probably need to be. In fact, they're probably the biggest consumer of fish in the world today. They consume all other types of fish.
I was just looking at the sustainable management of the marine resources. How can they use public morality when we have the most humane seal hunt? I'd like you to elaborate on how the seal hunt is done in the EU and other places where they import the product into the EU.
What happens if they decide, under public morality, to put a camera in a butcher shop or where they cook the shellfish. Where are we going in the world with trade? Is this not a trade barrier?
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 16:12
We made a number of arguments with respect to the question of public morality and animal welfare. We emphasized the relevance of comparing the standard applicable to the commercial seal hunt with other animal welfare standards, such as wildlife hunts in the EU, for example.
Certainly we recognize the WTO members have a right to establish their own standards for animal welfare, but they have to be based on factual information. They need to not be applied arbitrarily. It's important to look at other standards in similar situations, if a country wants to go down that road and try to justify a ban on the basis of animal welfare concerns.
We pointed out also there is a much less trade-restrictive way of going about this. We pointed out that other wildlife hunts in the EU as I said are, if anything, more of an offender in this area than the seal hunt. In particular we argued an alternative mechanism and a regime that would be less trade restrictive. The EU could have accepted a certification and labelling scheme, based on an accepted animal welfare standard.
We believe, and we argued before the panel and the appellate body, that the existing requirements to ensure a humane seal hunt in Canada are adequate and even more stringent, as I said, than the standards in other EU wildlife hunts such as the deer hunt. We also pointed out the EU applies a different standard to seals, an animal that's largely hunted outside its territory, that exceeds the standard they apply to hunts within their territory.
View Ryan Leef Profile
CPC (YT)
View Ryan Leef Profile
2014-04-07 16:26
It's perplexing, then, though, that there would be an argument that on moral grounds they're restricting this hunt, but they don't particularly care how the hunt is undertaken and whether it's humane or not humane. They don't care how people kill the seals as long as those people belong to a class of persons. In that sense alone, it's a discriminatory vein the EU is taking by saying that they appreciate the culture and value and their understanding of that, but it's very perplexing for them to say, “We're standing on a moral ground here, but we don't actually care how these seals are killed.”
Marvin Hildebrand
View Marvin Hildebrand Profile
Marvin Hildebrand
2014-04-07 16:26
It's certainly problematic, and it's also problematic because.... Well, the reality is that as Greenland avails themselves of this exemption, it's not in any way volume limited either, so—and we've argued this before the panel and the appellate body—essentially the effect of the ban has been to divert trade. It has diverted it away from Canada to places like Greenland, which somehow are able to qualify under an exemption that is not, in a de facto sense and maybe in other senses, available to Canada.
View Diane Finley Profile
CPC (ON)
Good morning.
Thank you for giving me this opportunity today.
I'm very pleased to be here today as Minister of Public Works and Government Services, and also as the minister responsible for Shared Services Canada to talk about my departments' main estimates and reports on plans and priorities for the 2014-15 fiscal year.
With me are Deputy Minister Michelle d'Auray and Chief Financial Officer Alex Lakroni from Public Works and Government Services Canada, as well as Liseanne Forand, who is the president of Shared Services Canada.
As you know, our government is focused on job creation, economic growth, and long-term prosperity for all Canadians, and both departments represented here today are primary service providers to Canada and within government, making sure we have effective and efficient operations in support of these goals.
As part of its broad mandate, Public Works and Government Services Canada serves many vital functions for the Government of Canada. Some of these roles include acting as the government’s principal treasurer, accountant, real property manager and central purchasing agent.
Of course, part of the central purchasing agent role involves procurement responsibility, including defence procurement, and I'll talk about that in a few more minutes.
Shared Services Canada, newly created in 2011 by our government, is working to standardize, consolidate, and streamline the Government of Canada's information technology services. Their mandate is to transform our existing systems, which are often costly and all too often outdated, into much more modern, reliable, and secure IT infrastructure to bring savings to Canadian taxpayers.
This morning I would like to provide some highlights on actions and progress being made by the two departments for which I'm responsible.
For the 2014-15 main estimates, PWGSC's net spending is anticipated to decrease by close to $197 million from the 2013-14 levels. As for Shared Services Canada, SSC's main estimates for 2014-15 show an increase of 5.4%, or $75.2 million.
This is largely due to the expansion of Shared Services Canada’s mandate and activities, and can be largely attributed to funding received from partner departments for new responsibilities for workplace technology devices. Partner departments are reducing their reference levels accordingly.
Looking to the year ahead, I am proud of several of our initiatives that will foster innovation, achieve additional cost savings for Canadian taxpayers and reduce red tape for small and medium-sized businesses.
In February Minister Nicholson and I announced Canada's new defence procurement strategy. This strategy represents a fundamental change in the government's approach to defence procurement, and its implementation will be a key priority for my department. Our new defence procurement strategy is designed to meet three objectives.
The first is to deliver the right equipment to the Canadian armed forces and the Canadian Coast Guard in a timely manner. The second is to leverage our purchase of defence equipment to create Canadian jobs, economic growth, and export opportunities. Third is to streamline our defence procurement processes while improving transparency and accountability.
Since that announcement we've already started to make progress. In fact the first projects under the strategy have already been announced. Those are the medium range radar and medium lift helicopter procurements. We're working with industry, as we committed to doing, on applying the new value proposition to these procurements.
Another way in which we are leveraging the government’s procurement to drive innovation and create opportunities for entrepreneurs, is through the Build in Canada Innovation Program. As you heard from my officials in December, BCIP, as we call it, allows the government to act as a first buyer, helping kick-start Canadian businesses by moving their home-grown innovations from the lab to the marketplace.
As we pledged, the build in Canada innovation program has been made permanent and now has an added military component. We're pleased to have received excellent feedback from entrepreneurs who now have greater opportunities to sell and export their innovative products while creating jobs for Canadian workers. The next call for proposals will be happening this spring.
We will also continue to work toward delivering on our government's commitment to preserve and rehabilitate our capital city's historic parliamentary precinct on time and on budget. Committee members may recall that this work is being carried out under a series of rolling five-year plans under an overarching long-term vision and plan.
On November 19, 2013, my officials appeared before this committee to provide an update on the status of renovations and the associated costs for the parliamentary precinct renovation project. I understand that at that time, committee members also made a site visit to West Block to see first-hand the cost and the complexity of the renovations there. Not only is this work crucial to ensuring that these buildings meet current construction standards and are able to fulfill their intended functions, but it also employs many skilled tradespeople.
For example, the rehabilitation of the Sir John A. Macdonald building, the former Bank of Montreal on Wellington Street, on its own will have generated around 600 jobs by the time the project is completed in 2015.
Public Works and Government Services Canada continues its major pension and pay transformation initiatives, which are replacing outdated legacy systems and centralizing service delivery for pension services in Shediac, New Brunswick, and pay services in Miramichi.
Together these transformation initiatives will enable the Government of Canada to save more than $100 million annually, starting in 2016-17. As well, Public Works is leveraging the new pension system to provide pension services for the RCMP and National Defence. These initiatives will further contribute to our government's plan to increase efficiencies and streamline our operations.
In the exercise of PWGSC's many functions, we strive to make the government more effective, more transparent, more modem and more accountable to Canadians. In keeping with this, we continue to work at further safeguarding the integrity of the public procurement process.
This is why on March 1, 2014, we further expanded the list of offences that make a company and individuals ineligible to bid on contracts. We also implemented measures that allow us to ban companies from accessing federal contracts if they have foreign convictions or make admissions of guilt in judicial proceedings. For all contracts with Public Works, subcontractors will now be bound by the same terms and conditions as the prime contractor.
Mr. Chair, now I would like to turn to Shared Services Canada.
Since its creation in 2011 it's already delivering results for Canadians in terms of savings, security, and service. SSC is building a modern and resilient IT platform that will help us meet Canadians' current and future service expectations while keeping their personal information protected and secure.
In launching the Canada cyber security strategy in 2012, our government sent a strong message that it takes security very seriously. Shared Services Canada continues to work closely with partner departments and agencies to strengthen the security of government systems—because there is simply no place for untrusted equipment and services in Government of Canada networks.
It's equally important that we make every effort to lower costs for taxpayers, another area where SSC is making its mark. By taking a government-wide approach, SSC continues to reduce duplication, increase efficiency, and cut costs. SSC has already generated $150 million in savings simply by getting better prices and reducing duplication and redundancy.
The 2014-15 report on plans and priorities underlines that we expect even better results in the future as the department realizes efficiencies in cost savings to the standardization, consolidation, and re-engineering of IT infrastructure services.
Let me provide you with a few details on this.
SSC is preparing to implement a new standardized, user friendly, and more secure e-mail system for the Government of Canada, replacing our 63 legacy systems with one. Consolidating e-mail systems to a common and more secure e-mail system will bring anticipated savings of over $50 million a year beginning in 2015-16. We've also established a first enterprise data centre which will be followed in 2014-15 by two additional government-wide data centres, eliminating up to 50 former facilities. Once the consolidation process is complete, we'll have moved from 485 data centres to seven, resulting in more savings, stronger security, and better service to Canadians.
SSC is also rationalizing the 3,000-plus overlapping and uncoordinated telecommunications networks that provide voice and data services. This will include eliminating costly Centrex telephone services and moving the government to a digital approach that takes advantage of such technologies as voice over Internet protocol, or VoIP, as an example. This will result in greater efficiencies and additional savings to taxpayers.
To further bring savings to taxpayers, SSC will be helping departments reduce their travel requirements by expanding the use of video-conferencing technologies and encouraging sharing of facilities among departments. In today's digital age, it just makes sense, not to mention that this initiative will generate about $7 million in annual savings.
Another way that Shared Services Canada is cutting costs is by consolidating and standardizing the procurement of workplace technology devices for federal employees, as mandated in budget 2013. By consolidating software contracts, Shared Services Canada will generate savings of $2.1 million in 2013-14 and $8.7 million starting next year and in future years.
Collectively, these measures are enhancing security and improving performance in service, while at the same time reducing costs and generating greater savings to taxpayers. I will continue to work to ensure that SSC's continued progress in modernizing the government's infrastructure will leave long-term benefits for Canadians.
Mr. Chair, I will conclude my remarks by saying that the Government of Canada is a large and complex organization, and whether in Public Works and Government Services or in Shared Services Canada, there will always be room for improvement. I see that both as a challenge and an opportunity. I'm also confident that these initiatives are contributing to the sound management of the resources entrusted to us and ensuring value and results for Canadian taxpayers.
Thank you, Mr. Chair.
I look forward to taking questions from members of the committee.
View Gerry Byrne Profile
Lib. (NL)
Madam d'Auray, I want to follow up on some of the minister's comments on the integrity provisions of procurement and government activity in procurement.
Foreign military sales are specifically exempt from the integrity provisions, as is the Koblenz office of Public Works and Government Services Canada.
That's a pretty glaring omission. Is there a reason for that?
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2014-03-27 9:58
Mr. Chair, with regard to foreign military sales, because it is a direct government-to-government procurement, in fact we rely on the selling government for the purchase...and their review of their materiel.
With regard to the Koblenz office, that was an oversight on our part. In fact it has now been covered by the integrity framework.
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2014-03-27 9:59
I believe you are referring to the public interest exception. The only exceptions really that apply are when it is necessary to enter into a business with a supplier where no other supplier is available, or there is an emergency, there are national security issues, health and safety, or there would be economic harm. The exceptions are fairly well limited and defined. At that point, we are also, if we have to exercise the exception....
To your question, yes, it is at the assistant deputy minister level, but it is done with a governance committee, and the exceptions are rigorously assessed and applied. Then we also exercise some fairly stringent control in administrative measures. We essentially raise the level of delegation for approvals of invoices, and we extend a fairly robust monitoring process, as well as audit provisions.
View Pat Martin Profile
NDP (MB)
I'd like to use my time to follow up on what Mr. Byrne was talking about. I'm still not clear about just what kind of screening does take place and will take place to ensure that contractors working for the federal government are not only not convicted criminals but that they live up to a fairly high corporate social responsibility and reputation.
What about the existing contracts? I know SNC-Lavalin, their real property division, has a huge operations and maintenance contract, and I believe that contract is for $1 billion or more. They've been convicted even recently for shenanigans and monkey business offshore at least. Do existing contractors get screened after the fact in an example like that?
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2014-03-27 10:08
Mr. Chair, there are two aspects. One of them is do we apply this rigorously to any new contract, and do we do an assessment on a contract-by-contract basis? We do.
The list of offences covered in fact was expanded as of March 1 of this year. One of the elements that we have added is a specific.... If you are unable to contract with us, the debarment period is now 6 to 10 years. One of the factors we found is that sometimes when companies bought each other out and one of the assets that they were acquiring would have had a prior conviction, but the company had actually changed all of its processes, it was no longer able to compete for contracts. We put in a limit of 10 years and then after those 10 years, there are still some measures that have to be put in place for us to be able to open the doors for contracting purposes. That said—
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2014-03-27 10:09
—with regard to a number of large contracts that we currently have, including, for example, the building maintenance contracts that we have with SNC-Lavalin, the company has voluntarily added to its existing contracts with us the terms of the integrity provisions that we have.
We have been working with a number of companies with which we have significant contracts or that span a long term to see if they would voluntarily adopt the integrity provisions. They're not compelled to do so, because obviously the contracts were signed before the integrity provisions were put in place in some instances. For any new contracts that we have with the company or any other company, as I mentioned earlier, we do the systematic review and check on a contract-by-contract basis.
View Gerry Byrne Profile
Lib. (NL)
Thank you, Mr. Chair.
Thank you very much to our witnesses.
Deputy Minister d'Auray, if you could provide the committee with some additional information about the new integrity measures for the tendering process, we'd be delighted to hear that.
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2013-11-28 16:06
We have had integrity measures for the procurement processes for some time, but the last set of changes we made were in July 2012, when we added a set of infractions where a bidder would be considered ineligible to do business with Public Works following a conviction.
I can give you a sense of what some of those offences would be: if they're found to be convicted of fraud against the government; frauds under the Financial Administration Act; payment of a contingency fee to a person to whom the Lobbying Act applies. There's a fairly extensive list of convictions that would render you ineligible to bid.
The other element that we will render ineligible is if you are found to be in collusion. If the Competition Bureau has found you to be in collusion but has given you a leniency provision, we will not consider the leniency provision. So you will also be banned or prevented from bidding and/or contracting with us.
We also have the provisions to terminate a contract or a real property transaction if in the course of a contract the company or its board of directors has been convicted of one of these offences. So it's not just prior to signing the contract, it's also during the duration.
There is no dollar threshold to this. It applies to every contract that is signed with Public Works.
Now, it does apply to procurements under the aegis of Public Works and Government Services Canada. It doesn't apply to other departments that have the authority to procure. We are now signing a memorandum of understanding with other departments that wish to use the provisions of our integrity framework and our validation and certification processes.
View Gerry Byrne Profile
Lib. (NL)
Thank you, Mr. Chair.
I want to follow up again on the issues of integrity measures and the public procurement.
Deputy Minister, I think we can both agree that there are some constraints to this process that should be identified, to prevent a false sense of security. Some of those constraints would be that convictions actually have to be against contractors who were engaged in contracts with the federal civil service, as opposed to relationships with private sector companies. They would actually have to have been convicted in a criminal court for a previous past dealing with the federal government.
Is that correct?
Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2013-11-28 16:41
Mr. Chair, that is not correct.
It's a list of infractions, some of which are against the government but others of which involve participation in activities of criminal organizations, income and excise tax evasion, and offences in relation to drug trafficking. I didn't read through the whole list of infractions and convictions but they are not just about prior business with the Government of Canada.
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