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Jerome Berthelette
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Jerome Berthelette
2015-03-30 15:35
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Thank you, Mr. Chair.
I thank the committee for giving us this opportunity to discuss chapter 5 of our report, entitled “Support to the Automotive Sector”. It is in our 2014 Fall Report. Joining me at the table is Richard Domingue, Principal, who was responsible for the audit.
The global economic recession of 2008 negatively affected Canada's production and employment in the automotive industry. Vehicle sales declined sharply in the United States and Canada, and some companies, including Chrysler and General Motors, could not generate sufficient income to fund their operations.
In December 2008, the governments of Canada and Ontario joined the U.S. government and offered financial assistance to Chrysler Canada and GM Canada. In total, the federal government provided $9 billion of financial assistance to support the restructuring of Chrysler and GM, including their Canadian subsidiaries.
We looked at how Industry Canada, the Department of Finance Canada, and Export Development Canada managed this financial assistance. The assistance involved complex transactions, high uncertainty, and tight timeframes. These circumstances had an impact on what Industry Canada could do to manage the assistance.
We found that Industry Canada, the Department of Finance Canada, and Export Development Canada managed the financial support to the automotive sector in a way that contributed to the viability of the companies and the competitiveness of the sector in Canada over the short and medium terms.
Industry Canada adequately assessed the recovery prospects of Chrysler and GM. This helped the government decide whether to participate in the financing of the companies' restructuring. However, Industry Canada had limited information on required concessions from unionized labour and other stakeholders, and on GM Canada's pension liabilities. This lack of information made it difficult for the department to understand the impact of its assistance on the long-term viability of the companies.
Industry Canada's information on the use of funds was limited to broad categories. For example, Industry Canada had limited documentation on the actual use of a $2.8-billion loan made to GM Canada for capital expenditures, warranty claims, and other general corporate purposes. However, the department adequately monitored the companies' production commitments in Canada.
Mr. Chair, we also found that there was no comprehensive reporting to Parliament of information about the restructuring assistance. Based on the information publicly available, we found it impossible to gain a complete picture of the assistance provided and of the amounts recovered and lost.
In 2008, the federal government launched the automotive innovation fund program. The program's objective is to support automotive firms in their strategic, large-scale research and development projects to produce innovative, greener, and more fuel-efficient vehicles. In addition, the government expects the program to contribute to a more competitive Canadian automotive sector.
We looked at how Industry Canada managed this program. Overall we found that Industry Canada's assessment of each project proposal was consistent with the program's terms and conditions, but in our opinion its risk assessment framework was more comprehensive than required. The department could streamline its risk analysis, given that recipients assume all of the technical risks and most of the financial risks of their projects.
Industry Canada has adequate information coming from progress reports and site visits to allow the progress of each project to be tracked.
However, Industry Canada has not yet used this information to determine whether the program is achieving its objectives.
Industry Canada has agreed with our recommendations and set deadlines for their implementation. Last December the department met one of its deadlines by issuing a report entitled “Summary Report on Canada's Support for the Restructuring of General Motors and Chrysler in 2009”.
Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Thank you.
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Philip Jennings
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Philip Jennings
2015-03-30 15:42
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With that, thank you, Mr. Chair and committee members, for allowing me to provide you with a brief overview of Industry Canada's response to the Auditor General's 2014 fall report on the restructuring assistance provided to General Motors and Chrysler during the economic crisis of 2009 as well as the automotive innovation fund.
As you are aware, Canada has a strong automotive sector, which generates $17 billion annually of value-added, or 10% of Canada's manufacturing GDP. With some 730 automotive suppliers supporting our 11 assembly lines and three engine plants, the industry employs some 117,000 Canadians directly, and another 377,000 Canadians indirectly. In fact, in 2014, Ontario was the largest automotive manufacturing jurisdiction in North America—larger even than Michigan.
The auto sector is also export orientated. There are 90% of Canadian-made vehicles sold abroad, the vast majority of these in the United States. The proximity to the U.S., one of the most profitable auto markets, is one of our competitive strengths. Our auto sector is truly part of an integrated North American market.
Industry Canada is always interested in views and ideas that will help us support and grow Canada's automotive sector. While we hope we will never face a situation like the crisis of 2009 again, we are also interested in learning from such circumstances and in continuously improving how we prepare and respond. In this light, we welcomed the Auditor General's four recommendations. In fact, Industry Canada has already acted upon two of them and plans to act on the other two recommendations in a timely fashion. I will discuss this later in my remarks.
As you know, Mr. Chair, late 2008 and early 2009 was a period of extreme uncertainty and volatility. Credit was tightening, consumers were scaling down and postponing their spending, and economies around the globe appeared to be heading into recession, if they weren't already. The auto sector was experiencing first-hand the impacts of consumers postponing major expenditures. Annual vehicle sales plummeted in the U.S. in 2009, from about 17 million vehicles per year to a little over 10 million.
With shrinking sales, the financial situation of all companies was becoming desperate, but for GM and Chrysler it was particularly bad, as it did not have access to capital like the others. In November 2008, GM announced it would run out of cash around mid-2009 without a combination of government funding, a merger, or sales of assets. No credit institution was in a position to help either GM or Chrysler.
While Canadian sales did not dip as much, Canadian assemblers were not sheltered by the events in the U.S., given that close to 90% of Canadian-made cars are exported to that country. Canadian subsidiaries were directly impacted by their parent companies' difficulties. There was a real risk that GM and Chrysler might shutter their Canadian operations in an attempt to restructure.
GM and Chrysler were at the time, and continue to be, the two largest carmakers in Canada, accounting for more than 55% of total production. Many of Canada's suppliers depended on contracts with GM and Chrysler. Without this work, many would not have survived, leading to a hollowing out of the suppliers and creating problems for the other original automotive equipment manufacturers.
That would have triggered a collapse of the entire Canadian automotive supply chain. The strong links and interdependencies between our supply chain and our assemblers were the key motivation for government action and support of GM and Chrysler. GM and Chrysler in Canada had to be protected from being collateral damage of the events in the U.S., not only for their sake but for the entire suppliers sector and ultimately the entire automotive industry in Canada.
Mr. Chair, as the Auditor General concluded, the Government of Canada did what it set out to do: prevent the disorderly collapse of the auto sector and ensure a viable automotive sector in Canada.
The clock was ticking. There was a very short timeframe to find a viable remedy for both GM and Chrysler. Both were in dire financial straits, and Chrysler needed to find a buyer. From the point that the crisis started and GM submitted high-level restructuring plans to the U.S. Congress in late 2008, governments had less than a month to decide whether to provide an initial set of loans. Again, once the company submitted more detailed plans, there was only about six weeks to assess their long-term viability.
As these events demonstrate, the restructuring of GM and Chrysler took place under intensely challenging circumstances. It required unprecedented collective action by the federal, Ontario, and U.S. governments.
While Charles and I at Industry Canada were not there at the time of the restructuring, the federal government did quickly organize an automotive response team. It was headed by Mr. Richard Dicerni and Mr. Paul Boothe, the deputy minister and associate deputy minister at Industry Canada at the time, and Mr. Ron Parker and Mr. David Moloney, who are my predecessors and who led a team of dedicated public servants who worked tirelessly and in unique ways to manage the government's response to the crisis. It supported a steering committee made up of deputy ministers from Industry Canada and Finance, as well as representatives from Export Development Canada, the Privy Council Office, and the Ontario Ministry of Finance and Ministry of Economic Development and Tourism, who all played important roles.
The team also reached out to stakeholders and experts to ensure it quickly had access to the necessary knowledge and expertise, whether on financial corporate restructuring from KPMG and Ernst and Young or on U.S. and Canadian insolvency law from Cassels Brock or on the automotive market from CSM Worldwide and Casesa Shapiro Group.
There were external discussions with those in the industry, including assemblers and suppliers, to gather essential information needed to assess and understand the risk. The government then made a responsible decision and took decisive action. Afterwards, my department monitored the two companies to ensure they fulfilled their end of the bargain and to ensure that the restructuring would deliver the desired results.
Mr. Chair, I am impressed by the work accomplished by my predecessors for the Canadian industry and its workers. Their work was the basis of the government actions and it paid off. It also proved to be pivotal in securing the immediate future of Canada's automotive industry and the economy at large. In early 2009, GM and Chrysler assembly plants directly employed an estimated 14,000 workers. Today both companies continue to be Canada's largest automotive manufacturers, employing about 19,000 Canadians, and the economic benefits extend far beyond the two companies. At the time of the crisis, the Department of Finance estimated that a total of 52,000 jobs were directly or indirectly tied to production at GM and Chrysler. Another study, by Leslie Shiell and Robin Somerville at the IRPP, estimated that in 2010 a total of 100,000 jobs, including jobs in the supplier sector, could have been lost without the restructuring. The study further suggested that in 2009 alone the economy could have suffered losses of $23 billion had GM and Chrysler not successfully restructured. The government's decisive actions ensured that there was business for hundreds of suppliers. The effects even spilled over into industries across the Canadian economy.
Today, all Canadian automakers, including GM and Chrysler, are investing in their operations. In the last two years in particular, each of Canada's five automotive assemblers has reinvested in Canada, and auto parts manufacturers have also invested in their operations. Another sign that the sector is doing well is that Canada's production increased to almost 2.4 million vehicles in 2014. The auto sector will continue to contribute significantly to the Canadian economy for many years to come.
All this work was and continues to be recognized, not only by the industry but also by third party analysis such as the IRPP study I mentioned, which concluded that the restructuring assistance was successful. Furthermore, Industry Canada received recognition for its accomplishments, including in the form of the Institute of Public Administration of Canada's 2010 innovative management award. I believe it is a remarkable success story that we were able to partner quickly and effectively with our counterparts at home and abroad, within and outside of government, to provide sound advice and ultimately save thousands of jobs and hundreds of businesses, and to secure a future for Canada's auto sector.
With respect to the automotive innovation fund, I am pleased that the report reflects a program that continues to be well managed. In many respects, it's still early days for the program. It was established in 2008 and seven projects have been supported. The initial projects are just now being completed, yet we know from the initial evaluation we did in 2012 that the program is meeting its short-term objectives. It has leveraged about $2.8 billion in investments since its inception, and as the Auditor General has recommended, we will continue to report against its longer-term objectives as projects are completed.
Mr. Chair, I want to conclude my remarks by noting that we have learned a great deal from these experiences, and the Auditor General's recommendations have helped embed these. The recommendations have highlighted that clear and comprehensive reporting on support provided and the management of that support contributes to the public understanding of the restructuring success. In order to increase the ease of access to the information, last December we published a single summary report on the restructuring support and recoveries. We've also committed to undertaking a review of the management of the restructuring assistance with a focus on identifying lessons learned. This work will be completed this year.
The Auditor General also recommended reviewing how we evaluate proposals for support from the automotive innovation fund, and monitoring the performance of the program.
We have updated the program's risk assessment framework and made explicit the manner in which risk profiles of applicants are assessed. We will also evaluate the program again in 2017-18 to determine to what extent it achieves its long-term objectives.
It is fair to say, just like all Canadians, we hope we never face such a challenge again, requiring us to use the lessons learned from the 2009 crisis.
Thank you, Mr. Chair and committee members. We will be pleased to respond to your questions.
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Jerome Berthelette
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Jerome Berthelette
2015-03-30 16:01
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Mr. Chair, I agree with what you say.
I would make reference to paragraph 5.88, which is our conclusion:
...we concluded that Industry Canada, the Department of Finance Canada, and Export Development Canada managed the financial support to the automotive sector in a way that contributed to the viability of the companies and the competitiveness of the sector...over the short and medium terms.
Generally, this is a good news story.
Mr. Chair, I would then make reference to paragraph 5.23. While I just noted that it is a good news story, there are certain areas where we saw that some more work could have been done. There were areas where there was limited analysis and limited information.
We recognized, as we state in paragraph 5.25, that, “The federal government made its decisions on financial assistance in a period of high uncertainty and within tight time frames.” We understand that. We think more work could have been done in terms of the analysis, maybe relying less on the material presented by the companies and doing a little more independent analysis of it, and perhaps doing a more independent challenge of the information that had been presented.
I think that a final restructuring plan would have been good. It would have provided a place where all of the details related to the restructuring could have been brought together in one place. It would have made it easier for the department and for Canadians to follow what had gone on in the restructuring, and would have made it easier for the department to report against the restructuring.
We have in appendix A, which I believe is at page 25 in my document, some suggestions related to going forward if there is ever another situation like this. We made suggestions related to the planning, monitoring, and public reporting related to such large interventions by the federal government.
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View Jeff Watson Profile
CPC (ON)
View Jeff Watson Profile
2015-03-30 16:11
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You pointed out there was no “lessons learned” exercise. That is in progress, as I understand it. What is the expected completion date?
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Philip Jennings
View Philip Jennings Profile
Philip Jennings
2015-03-30 16:11
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It will be completed by the end of this year.
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Michael Ferguson
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Michael Ferguson
2013-11-27 15:33
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Thank you.
Mr. Chair, I am pleased to present my Fall 2013 Report, which was tabled in the House of Commons yesterday. I am accompanied by assistant auditors general Wendy Loschiuk and Maurice Laplante, and principals Gordon Stock and John Affleck.
This report touches on a range of long-standing issues the government has been struggling to address, with potentially significant impacts for Canadians.
Rail safety is one such issue. Fourteen years ago, Transport Canada recognized the need to shift from an inspection-based oversight approach to one that integrates the oversight of safety management systems. This shift is ongoing. Much work remains to be done, and the transition is taking too long.
Transport Canada completed only 26% of its planned audits of federal railways over a three-year period. Most of these audits were narrowly focused and provided assurance on only a few aspects of railway safety management systems. The department has yet to establish an audit approach that provides a minimum level of assurance that federal railways have implemented adequate and effective safety management systems for complying on a day-to-day basis with Canada's framework for rail safety.
Our audit of Canada's food recall system showed that the Canadian Food Inspection Agency does a good job of managing most aspects of recalls. However, the weaknesses we saw in both follow-ups with industry and in large emergency recalls leave significant gaps in the system. While illnesses were contained in the recalls we examined, I'm not confident the system will always yield similar results. The weaknesses we found in decision-making and follow-up stand in the way of the continuous improvement of a system intended to deal with food safety incidents in Canada.
In this report, we also looked at how the Canada Revenue Agency followed up on a list of possible Canadian residents with accounts in a European bank. The Canada Revenue Agency's initial work on offshore banking information shows promise. However, with more lists to look at and changes in legislation that will give the agency access to more information, I believe that it needs to formalize its approach to deal with the increase in its workload.
In another audit, we looked at border controls to prevent illegal entry into Canada. It is very important for the safety of Canadians that controls at the border work as they are supposed to. I am very concerned that our audit found too many examples of controls not working.
Though the Canada Border Services Agency has made significant progress in some of its efforts to detect high risk travellers, it often does not get the information it needs to identify these travellers before they arrive in Canada. Furthermore, even when the agency has the information, we found that controls do not always work. We also found that the RCMP does not know the extent to which it is successful in intercepting people who enter the country illegally between ports of entry.
Though it is not the first time we have raised these issues, border controls are still not working as they should. With better analysis of existing information and better monitoring, many of these issues can be fixed.
Our audit of disaster assistance to agricultural producers is an example of a program with a disconnect between the program's objectives and its outcomes.
Providing quick assistance to agricultural producers is a key goal of the AgriRecovery program. While Agriculture and Agri-Food Canada has delivered assistance to producers for large disasters within their targeted timeline, those producers impacted by disasters with a smaller total payout often wait more than a year for financial help.
Agriculture and Agri-Food Canada needs to streamline its processes for smaller initiatives, and it must track whether it is meeting its timelines.
Let's now move on to our audit of online government services. We found that, since 2005, the government has not significantly expanded the services it offers online to its citizens. As Canadians rely more on the Internet in their day-to-day lives, they expect the government to provide them with online information and services that address their needs.
The government has estimated that savings can be realized by providing better online services for Canadians, but there needs to be a concerted client-focussed strategy. Departments need to work together to make this happen.
Our audit of Aboriginal Affairs and Northern Development Canada's role in supporting emergency management on first nations reserves showed that the department is in a cycle of reacting to emergencies. It has not been able to focus on what can be done to prevent and mitigate these events.
Some reserves continue to be adversely affected in significant ways by repeated emergencies, such as floods. These difficulties are compounded by the fact that the respective roles and responsibilities of the federal government and other stakeholders are unclear. Aboriginal Affairs and Northern Development Canada must work with other stakeholders, including first nations, to reduce the human and financial costs of emergencies over the long term.
We also followed up on our audit of internal controls over financial reporting. Eight years after the government made it a priority to have in place effective internal controls over financial reporting, I am concerned that several large departments are still years away from knowing whether these controls are in place and working effectively. With annual spending of nearly $300 billion across government, effective internal controls are a necessary part of safeguarding public assets. It is imperative that departments get this work done without further delay.
This report also looked at the national shipbuilding procurement strategy, specifically whether it has been designed and managed to help sustain Canadian shipbuilding capacity and capability over the coming decades. It's still early, but so far the strategy has resulted in the transparent and efficient selection of two yards to build ships for the navy and the coast guard.
Although only a few contracts have signed to date, and it will be a few years before any ships are delivered, the national shipbuilding procurement strategy shows promise. As with anything new, there are risks involved, and these will need to be closely monitored on an ongoing basis.
A look over the audits that we are reporting on today shows that, in many cases, the results need to be improved. Even when the government recognizes a problem, it takes too long to develop and implement solutions. The resulting delays can have significant impacts on Canadians, both directly and indirectly.
Departments need to focus on critical success factors that are proven to work. These include setting clear priorities, applying lessons learned, and monitoring deliverables against timelines and objectives.
Mr. Chair, that concludes my opening statement.
We are happy to answer any questions the members may have. Thank you.
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Michelle d'Auray
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H.E. Michelle d'Auray
2013-06-04 11:53
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Thank you, Mr. Chair.
Good morning, again. It's still morning.
We are here to present and discuss with the committee the measures that Public Works and Government Services Canada has put in place to uphold the public's trust in procurement and real property transactions.
With me today is Barbara Glover, the assistant deputy minister from the departmental oversight branch. Barbara's branch encompasses the sectors that we call operational integrity, special investigations, forensic accounting, and industrial security. It also includes our office of internal disclosure, under the PSDPA.
Pierre-Marc Mongeau has appeared before you many times. He is here with me today as the assistant deputy minister, real property.
Pablo Sobrino is the associate assistant deputy minister, acquisitions. He was before you recently with regard to the integrated relocation program. Those are the colleagues with me today.
As deputy minister, I am proud of the key role my department plays as a common service provider so the departments and agencies can obtain the goods, services and accommodations they need to serve Canadians. The department is also the primary interface between government and business on a wide range of business activities.
Over the past three years, we have overseen an average of 49,000 procurements a year with an average value of $14 billion; we house some 270,000 public servants in more than 1,800 locations across the country, involving about 500 real property transactions per year.
As you can well imagine, the procurement processes by which we make these acquisitions and transactions can vary from the immensely complex, involving significant dollar values and sophisticated equipment and services, as is often the case with military procurements, to those of lower dollar value or greater volume and more recurrent requirements, such as supply arrangements and standing offers for a wide range of goods and services.
Given our roles and responsibilities, Public Works and Government Services Canada has a strong history of working to protect the public interest from those with criminal or corrupt motives. My department has a framework in place that supports accountability and integrity in procurement, with strong governance, codes of conduct, fairness monitoring, audits, financial controls, and internal investigations. These mechanisms apply to all those involved in our procurement activities.
I understand the committee has expressed interest in the fairness monitoring program and our integrity framework.
So I will start with the fairness monitoring program, which is a component of our integrity measures. The program was formally instituted in 2005 and expanded in 2009 to provide management, client departments, suppliers, Parliament and Canadians with independent, third-party assurance that our large or complex procurement activities are conducted in a fair, open and transparent manner. The program covers all complex or major departmental procurement and real property transactions. The findings are publicly released on our website.
Our policy on fairness monitoring requires a mandatory assessment for coverage with regard to activities in which risk related to sensitivity, materiality, or complexity is such that fairness monitoring coverage is warranted, as well as for all departmental activities subject to ministerial or Treasury Board approval.
Other departmental activities, for which an enhanced assurance of fairness, openness, and transparency is desired, can also be covered for fairness monitoring, whether mandatory or optional. The assistant deputy minister for oversight reviews these assessments and makes her recommendations to me on whether or not to proceed with fairness monitoring.
The most recent improvement to the program is a new standing offer for the services of fairness monitors, which will be issued shortly with a start date of June 10, 2013. This includes formal terms of reference for fairness monitoring engagements. I believe the committee had asked for the statement of work for the procurement of those services, which I understand we have provided.
The terms of reference will ensure alignment between fairness monitors and the department on the standard of fairness to be used, and the standard of conduct for fairness monitors to follow during fairness monitoring engagements.
I will now turn to our overall integrity framework.
All PWGSC employees must adhere to the department's code of conduct that includes specific provisions for the proper management of procurement activities through compliance with all available practices, controls and policies; and to prevent situations of real, potential or apparent conflict of interest. Employees must disclose when considering or engaging in outside employment and/or ownership of businesses, and comply with guidelines related to gifts, hospitality and other benefits.
Over and above this general code, the department implemented in 2007 and then updated in 2012 a code of conduct for procurement that applies to suppliers and to departmental staff and that outlines what is acceptable conduct when contracting with the government. Our goal is to ensure that the department conducts its business to the highest ethical standards, standards that Canadian citizens expect us to uphold and protect. It is a role that we take very seriously. And we have implemented significant compliance measures.
Let me give you an overview of these significant compliance measures.
Starting in 2007, as part of the Federal Accountability Act and its action plan, Public Works and Government Services Canada included a code of conduct for procurement in its solicitation documents, which included “payment of a contingency fee to a person to whom the Lobbying Act applies” to existing offences, which rendered convicted suppliers ineligible to bid on procurement contracts. The code also included frauds against the government under the Criminal Code and under the Financial Administration Act. Bidders formally certified with their bids that they had read the code and agree to be bound by its terms.
Building on these measures, in 2010 the department added anti-competitive convictions under the Competition Act to its list of offences that render bidders ineligible. These convictions include corruption, collusion, bid-rigging, or any other anti-competitive activity.
In July 2012, the department further expanded the list of offences that, if convicted, would render companies ineligible to do business with PWGSC. These offences include money laundering, participation in activities of criminal organizations, income and excise tax evasion, bribing a foreign public official, and drug trafficking.
For the first time, PWGSC also applied its integrity provisions to all real property transactions, which includes leasing arrangements for all uses, letting of commercial crown-owned space and the acquisition and disposal of crown-owned properties.
In November 2012 the department further clarified its integrity measures by removing the leniency exemption and introducing a public interest exemption. Leniency provisions allow an applicant to come forward, cooperate, and plead guilty in exchange for lenient treatment in sentencing. Given the seriousness of the infractions identified in the integrity provisions, the department no longer does business with individuals and companies found guilty of these offences unless exceptional circumstances require it for the public interest. This applies even when leniency may have been granted to the company through a program.
Under these provisions, the department can no longer enter into a contract or real property transaction or accept bids from individuals, companies, and the current members of their board of directors, including company affiliates, convicted of listed offences. These measures do not apply to company employees.
Should a company or a member of its board of directors obtain a record suspension—it used to be a pardon—or have its capacities restored by the Governor in Council, they would become eligible to do business with Public Works and Government Services Canada. In instances of public interest such as health and safety, emergencies, national security, or if there is only one supplier, the department could maintain the contract.
Successful bidders are required to maintain relevant information and their certification for the duration of the contract. Bidders and their officers must remain free and clear of convictions specified in the code of conduct, which is incorporated into their contract.
If a company is convicted of an offence after a contract has been awarded, the department may cancel the contract for default if the terms and conditions of the contract include our enhanced integrity provisions.
However, these provisions are not retroactive. So in cases where the provisions are not in the contract, the department is legally obligated to honour the contract. In such instances, heightened scrutiny and oversight and rigorous controls may be imposed for the remainder of the contract to protect taxpayers' interests.
Should we suspect wrongdoing, the department will not hesitate to take action, including procurement and administrative reviews to detect any irregularities; examining all invoices to ensure their accuracy; requesting the voluntary inclusion of the department's integrity measures in contracts; audits; and formal or departmental investigations.
If the department suspects wrongdoing, we will not hesitate to take the necessary measures, including requesting formal investigations by the RCMP or the Competition Bureau.
These measures apply only to Public Works and Government Services-managed procurements and real property transactions. The department manages approximately 83% of the value of all government-wide procurement. Departments and agencies have a delegated authority to contract for goods up to $25,000. Some departments have exclusive authority for goods contracting. Departments and agencies may contract for services under their own delegated authorities. However, a number of organizations that have such delegations or authorities, such as the Canada Revenue Agency, have entered into a memorandum of understanding with our department so as to be able to benefit from our integrity provisions.
The department has put in place numerous measures that demonstrate its commitment to doing business with companies and individuals that respect the law and act with integrity. The department will continue to build upon these measures. That is our responsibility as stewards of public funds.
We continue to enhance our approaches and measures. For example, last month we entered into a memorandum of understanding with the Competition Bureau of Canada to promote cooperation between our two organizations on the prevention, detection, reporting, and investigation of possible bid-rigging or cartel activity. Our minister has also asked us to explore improvements to the framework and to see how it could be applied more broadly across government.
Mr. Chair, this concludes my remarks.
Thank you for the opportunity to present our integrity measures and fairness monitoring program.
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View Linda Duncan Profile
NDP (AB)
Okay. I won't pursue it further, but it doesn't really answer my question.
Yes, indeed, if you violate the Criminal Code, you violate the Criminal Code. But the decision by this government has been to use a non-legally binding code of conduct instead of, in fact, issuing regulations under the legislation. I remain puzzled as to why, given the potential seriousness and the scale of the size of these contracts, we wouldn't proceed in that way.
My next questions are about the fairness monitoring. We welcome Ms. Glover, who I understand is the ADM who would be responsible for the fairness monitors.
There have been a good number of questions raised about the fairness monitors. I know that you will not feel comfortable discussing the specific case brought by Envoy, which is potentially under appeal—not yet filed, as I understand—but I would like to ask you questions about the issues that were raised and whether you think those are worth pursuing.
The justice of the Ontario Superior Court of Justice in that case raised serious questions about the partiality of the monitors, due to the fact that they are directly retained and remunerated by Public Works, and therefore, he said, “He who pays the piper picks the tune”. There is at least the appearance of bias in that, if you're a monitor, you're not going to want to find that there are problems with the way Public Works is administering the contracts.
There have been suggestions also by the OECD that there should be independent mechanisms set up. In their “OECD Principles for Integrity in Public Procurement”, in principle 9, they have recommendations for the better handling of complaints from potential suppliers in a fair and timely manner, and actually recommend the establishment of an impartial review body with enforcement capacity independent of the procuring entities, which would rule on procurement decisions and provide adequate remedies.
I'm curious to know if you have taken into consideration, given various issues that have arisen over the last couple of years and in the recent case—which is, I understand, under appeal, and it's not the only case proceeding—are you giving consideration to the OECD principles, which I presume we subscribe to in this country, and to the issues raised by the court generally about the role of the fairness monitors?
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Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2013-06-04 12:09
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Perhaps, Mr. Chair, I'll start with the OECD principles.
We do have two bodies that oversee procurements. The first one is the trade tribunal, the CITT, and the second organization is the Procurement Ombudsman. So we do have independent bodies. One is a tribunal, so it has a power of remedy, and the other one, the Procurement Ombudsman, does have the power to address complaints.
I will ask Ms. Glover to talk about the fairness monitoring program, the independence of it, and how we go about selecting the monitors, and how they're reporting. Their work in relation to the department is, indeed, independent.
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Barbara Glover
View Barbara Glover Profile
Barbara Glover
2013-06-04 12:10
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Sure.
The fairness monitoring program was formally put in place in 2005. As Michelle mentioned in her introductory remarks, we have recently updated the standing offer. The way we seek fairness monitors is through a standing offer. That process is complete. We seek folks from outside the department who are independent and who have various credentials, which are laid out in the statement of work that we provided you earlier. We ask these people to come in, observe the procurement process from beginning to end, essentially, prior to setting out a request for proposal.
They engage in real time with the folks in charge of the procurement. They are asked to observe every aspect, to read all of the documents related to a procurement, to make observations, again in real time, and then to prepare a final report, which is posted.
At the beginning of engagement they need to attest to their independence, i.e., have no possible conflict of interest in undertaking their work. They are engaged by my branch, which is to say not the folks undertaking the transaction, whether it's a real property or procurement transaction.
Is that...?
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View Dan Albas Profile
CPC (BC)
View Dan Albas Profile
2013-06-04 12:53
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Okay.
We've heard some concerns about the current model. To me, you either have an independent fairness monitor outside of government that can put forward its own people and experts in their field and bid on a competitive process, or the alternative is to have it somewhere within the government, whether it be independent or part of a department. To me, there are always going to be concerns regardless, because if they're within government, they could say, well, then, it's not really a truly independent process.
Is that correct?
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Michelle d'Auray
View Michelle d'Auray Profile
H.E. Michelle d'Auray
2013-06-04 12:54
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I think this is why we use independent third parties. They are selected as a result of an evaluation process, which is not run by the two major branches that oversee processes, whether real property transactions or acquisitions. The departmental oversight branch is running the selection process completely separately and as a result of that, the people we contract with are, in fact, selected based on a range of criteria. They are independent of the process.
As I mentioned earlier, the suppliers and the various stakeholders engaged in those processes have direct access to the fairness monitor. As my colleague indicated, the report that is produced by the fairness monitor is signed off by the fairness monitor, not by the department, and the report is published and posted on our website.
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View John Duncan Profile
CPC (BC)
Thank you very much once again.
As you all know, Canada's north is home to world-class reserves of natural resources representing tremendous economic opportunities for northerners and for all Canadians. Since forming government in 2006 our government has consistently demonstrated its commitment to equipping northerners with the tools they need to take advantage of those opportunities. I cannot emphasize enough how important Bill C-47 will be in allowing northerners to unlock these opportunities. Bill C-47 fulfills the Government of Canada's last legislative obligations flowing from negotiated land claims in both Nunavut and the Northwest Territories, and proposes mechanisms to improve regulatory processes, encourage investment, and allow resources to be developed in a sustainable manner. This will lead to jobs and benefits for future generations of Canadians.
I understand my officials were here on Monday last week to speak to some of the technical elements of Bill C-47, but their appearance was cut short due to votes. They're here again with me today and can answer some of your more technical questions. I understand they'll be coming again before committee soon.
The first part of this bill is the Nunavut planning and project assessment act. This bill sets out clear, consistent, reliable, regulatory processes that the people of Nunavut can use to manage development of their land and resources that will promote economic development by boosting investor confidence. Not only does this bill implement Canada's legislative obligations under the Nunavut Land Claims Agreement, it also fills existing gaps in the Nunavut regime for project approval. These improvements are not just necessary, they are urgent. They are needed in order to put in place a state-of-the-art planning and assessment regime to meet the surging tide of resource development opportunity in Nunavut.
The fact that the bill establishes the Nunavut Planning Commission as the single entry for project proponents will provide the clarity and certainty that has been called for and supported in various other jurisdictions across Canada, and will no doubt prove to be equally successful in Nunavut. For example, the bill assigns clear roles and responsibilities to the Nunavut Planning Commission, the Nunavut Impact Review Board, departments and agencies, responsible ministers, regulatory authorities, and project proponents. It allows the development and implementation of critical timelines for key decision points in the process, ensures that all parties to the process do not act until the appropriate approvals have been received, and establishes the critical inspection, enforcement, and monitoring regimes to backstop all decisions taken.
Mr. Chairman, there have been questions raised in the House of Commons about the adequacy of our consultations on this bill. Work on the Nunavut planning and project assessment act began in 2002, and the resulting bill before you today reflects almost a decade of negotiation and close consultation. This bill is a direct result of the government's strong partnership with the Government of Nunavut and Inuit leadership, as well as extensive consultation with the resource industries that will be affected. This bill, produced in partnership, includes valuable input from the Nunavut Legislative Working Group, a group of representatives from the federal government, the Government of Nunavut, and Nunavut Tunngavik Inc.
Representatives from the Nunavut Planning Commission and the Nunavut Impact Review Board also acted as advisers. Their technical expertise and experience were great assets to the working group.
Representatives of the mining and oil and gas industries also provided useful suggestions related to maximizing regulatory efficiency and avoiding duplication, achieving clarity and certainty through specific timelines, and consolidating roles and responsibilities among institutions of government.
Other groups raised additional concerns. Certain roles and responsibilities outlined in the draft bill required further clarification; monitoring and enforcement provisions needed to be strengthened; and questions over the bill's application to development projects that cross geographic boundaries and political jurisdictions called for further clarity.
I'm proud to say that these consultations have resulted in legislation that will truly serve the needs of the people of Nunavut today and in the future.
The second part of Bill C-47 will establish the Northwest Territories surface rights board. This fulfills obligations in the Northwest Territories under the Gwich'in Comprehensive Land Claim Agreement and the Sahtu Dene and Métis Comprehensive Land Claim Agreement. Both agreements refer specifically to the need for a surface rights board.
The establishment of the board is also consistent with the terms and the spirit of the Inuvialuit Final Agreement and the Tlicho Land Claims and Self-Government Agreement, the other two comprehensive land claims in the Northwest Territories. The Tlicho agreement allows for the establishment of a surface rights board. The Inuvialuit Final Agreement specifies that any interim measures related to access across Inuvialuit lands to reach adjacent lands will be replaced when a law of general application, such as this bill, is enacted.
The board will, on application, make orders related to terms, conditions, and compensation only where they have been requested to do so and only after such rights have been previously issued. In so doing, this board will contribute to greater certainty and predictability for long-term economic growth and job creation in the territory.
I want to emphasize that this board does not, nor will it ever, issue any kind of right to surface or subsurface resources. To be absolutely clear, this board does not have any jurisdiction in the realm of resource development decision-making. This board does one thing only: if asked by one or both of the parties, it will settle disputes about access to land.
Consultations on the development of the Northwest Territories surface rights board act were also extensive. As I mentioned earlier, this bill responds to our last legislative obligation from the Gwich'in and Sahtu land claim agreements, and completes the regulatory regime that was originally envisioned in the Northwest Territories land claim agreements.
In total, over 35 consultation sessions were held with 13 aboriginal groups and governments, the Government of the Northwest Territories, and industry organizations. These sessions included groups within and outside settled land claims in the Northwest Territories, and groups outside of the Northwest Territories with transboundary claims. That was the comprehensive consultation, negotiation, and collaboration that went into developing the bill. That was the degree of partnership that went into putting together this very important legislation.
The bill before this committee today is a product that reflects the work, the opinions, and the positions of many interests and groups across two territories. All sides contributed to produce a bill that meets the needs of the people of Nunavut and the Northwest Territories.
As you can see, Bill C-47 responds to a chorus of other groups calling for action. Territorial governments have asked for better coordination and clearly defined time periods for project reviews. Resource companies have urged us to make the review process more streamlined and predictable. All Canadians want to make sure that promising opportunities will no longer be delayed or lost due to complex, unpredictable, and time-consuming regulatory processes. Bill C-47 will help make this a reality.
Thank you, Chair.
I look forward to the committee's review, and my officials and I will be pleased to respond to any questions.
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Guy Parent
View Guy Parent Profile
Guy Parent
2012-10-29 15:30
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Thank you, Mr. Chair and committee members.
I will first introduce the people who are with me today: Gary Walbourne, director general of operations, as well as deputy ombudsman in my absence; and Diane Guilmet-Harris, our legal counsel at the office.
Thank you for inviting me to appear before you today to share my thoughts on the Veterans Review and Appeal Board.
Your review is very important given the critical role that the board plays in ensuring that veterans and other clients of Veterans Affairs Canada receive the benefits and services to which they are entitled.
In any given year Veterans Affairs Canada makes close to 40,000 decisions with appeal rights to the board. Given the number of decisions, and despite efforts to the contrary, errors can be made. Therefore, it's important to have an independent, specialized body that veterans and other clients of Veterans Affairs Canada can turn to when they are dissatisfied with the department's decisions. An efficient redress process is key to accessibility.
Parliament was of that view as well when it created the board in 1995, entrusting it with the power to change or overturn decisions made by Veterans Affairs Canada if it finds that the laws governing disability pensions and awards were not properly applied.
To fulfill, and I quote, “the recognized obligation of the people and Government of Canada to those who have served their country so well and to their dependants”, Parliament asked the board to adopt a liberal and generous interpretative approach when making decisions, and specifically directed the board to section 39 of the Veterans Review and Appeal Board Act to draw every reasonable inference in favour of applicants, to give them the benefit of the doubt when weighing the evidence, and to accept any credible, uncontradicted evidence.
More than 20,000 veterans and other applicants are better off as a result of decisions made by the board since its creation.
Yet, as impressive as the statistic is, there is mistrust of the board within the veterans' community and much concern as to whether or not the board is making decisions in compliance with its enabling legislation. I wanted to know if those concerns were founded, and that is why we carried out the analysis of Federal Court judgments pertaining to the board.
As you know, 140 board decisions were challenged in the Federal Court and 11 of those were appealed to the Federal Court of Appeal. In those cases the courts had to determine if the board made its decision in compliance with the Veterans Review and Appeal Board Act and in accordance with the principles of procedural fairness. Since the Federal Court provides an independent judicial assessment on the matter in which questions of law, fact and procedural fairness are handled in cases before them, it made sense to me to take a look at the court's judgment pertaining to the board.
Before I address the findings and recommendations of my report, let me take a moment to discuss the issue of statistics.
Since its creation in 1995, the board has made more than 119,000 decisions, of which 34,000 could have been subject to judicial review. To suggest that there is nothing to worry about because only 140 of those decisions have been challenged in the federal courts does a great disservice to veterans and serving members of the Canadian Forces and the RCMP.
There are many reasons that ill or injured veterans and serving members do not take their cases to the Federal Court including “appeal fatigue” and above all legal costs, which can vary from $15,000 to $50,000. So contrasting the number of Federal Court challenges with the overall number of decisions made by the board over the years is meaningless and misleading. What's important is what the Federal Court says about the cases it reviews.
In fact, I would argue that it is the misguided opinion that it is "only 140 decisions" and that "all else is fine" that explains why board decisions have been returned by the Federal Court for the same reasons over a long period of time. This means to me that neither the board nor the department takes the Federal Court judgments seriously enough.
Up until 2009-2010, the board used a percentage of Federal Court judgments that uphold VRAB decisions as a performance indicator of fairness in the redress process for disability benefits and was satisfied that fairness was assured if the court upheld 50% of its decisions. That is not acceptable. Furthermore, in its 2010-11 performance report, the board did not report against this indicator at all. Instead, it reported on how fast decisions were made.
I'm sure that you have heard the old adage that what gets measured, gets managed. While I encourage both the department and the board to find quicker ways to address the needs of ill and injured veterans and serving members, it should not be done to the detriment of the quality of decisions made.
To get back to my report findings and recommendations, the independent analysis performed by the law firm of Borden Ladner Gervais found that in 60% of the 140 board decisions reviewed by the Federal Court, the court ruled that the board erred in law or fact, or failed to observe principles of procedural fairness.
The five most common errors for which the Federal Court returned decisions to the board for review were: the failure to liberally construe the provisions of the Veterans Review and Appeal Board Act and the Pension Act; the failure to accept the credible uncontradicted evidence; the failure to accept credible new evidence; the failure to give the benefit of the doubt; and the failure to ensure procedural fairness by not providing sufficient reasons for decisions or not disclosing medical evidence considered by the board.
Based on those findings, I concluded that veterans' concerns are founded and that the status quo is not acceptable. Changes are needed. As you know, I made seven recommendations.
Three recommendations address the need for greater transparency and accountability, namely, improved reporting to Parliament, posting all Federal Court decisions on the board's website, and the provision of reasons for decisions that clearly demonstrate the board has met its obligations under its enabling legislation.
Two recommendations called for the establishment of a formal process to review each Federal Court judgment rendered in favour of the applicant for the purpose of remedial action to the way decisions are made, and for the priority treatment of cases sent back to the board for rehearing.
The last two recommendations call for the Bureau of Pensions Advocates to represent veterans before the Federal Court and for legislative changes to allow for benefit retroactivity to the date of initial application in cases where the board makes a favourable decision as the result of a successful challenge in the Federal Court.
The Veterans Review and Appeal Board has put in place a plan to address the first five recommendations, and thank Mr. Larlee for acting as quickly as he has. You may be interested to know that my office has just started a follow-up review to determine if the changes made by the board fully address the shortcomings that we have identified. The report will be released in the next year.
As for the last two recommendations, I am engaged with the minister. He has recently outlined his action plan to further reduce red tape, increase efficiency and provide clarity around decisions. If properly implemented, these actions could reduce timelines in process and reduce the need for veterans to seek relief in the Federal Court. A plan is only that until it is put into action, and I will be monitoring the situation to ensure that the actions taken are indeed addressing the intent of the recommendations.
For me, the matter is quite simple. As long as the Federal Court continues to return a majority of board decisions for errors of fact, law, or procedural fairness issues, I will continue to say that fairness in the redress process is not assured. My report looked at the end result: the board's decisions themselves. Your review of the board's processes and activities is timely and it should address the why questions. Why is the process not functioning as it was meant to? How should the board and the overall VRAB-VAC process be improved going forward?
I humbly suggest to you that there are six key areas that should be looked into: the board's structure; the selection process of board members; workload issues; process by which the board's and the department's decisions are made in accordance with Federal Court judgments on a go-forward basis; quality assurance and efficiency versus effectiveness equation; and very important, the board's operating culture.
In the end, however, it all comes down to culture, and I would like to explain why.
In 1967 the Committee to Survey the Organization and Work of the Canadian Pension Commission, better known as the Woods committee, in addition to providing recommendations for reform, documented the evolution of the administration of veterans' benefits. It showed that from the enactment of the Pension Act in 1919, the intention had always been to have some form of an appeal body for veterans.
Despite major reforms through the years, that goal had not been achieved. Despite that, in 1967, the Woods committee was still adamant that an independent appellate body was essential for maintaining the integrity of the disability process and ensuring that veterans have trust in the system.
The Woods committee went into much detail examining a number of issues that were major concerns not only for veterans, but also for the government. Concerns included staffing levels, the low percentage of appeals granted in favour of the applicant, the need for reasoned decisions, the unfair practice of not disclosing information to the applicant, and the failure of adjudicators to liberally construe the legislation in favour of the veteran.
In 1995 the Woods committee goal of an independent appellate body was finally achieved.
Here we are in 2012 once again discussing the effectiveness of the Veterans Review and Appeal Board in relation to the same issues of processing times, board composition, reasons for decisions, disclosure of information, and liberally construing legislation that has been debated since 1919.
History has shown that although structural change can alter the process to create efficiencies and increase effectiveness, cultural change is what is needed if we want to address the why questions and eliminate the root causes of many of our veterans' concerns.
The first step to cultural change is transparency. On the one hand, veterans need to have full disclosure of information that decision-makers are using to make their decisions, and they need clearly reasoned decisions that are understandable and make sense to them. On the other hand, decision-makers need to have all the information necessary to make decisions at the earliest point in the process.
The second step is quality control of the adjudication process. Measures need to be put in place so that the board and the department work together to improve the quality of the overall process rather than, as is too often the case now, having the effects of expedited processing at the beginning of the application process leading to an increase in the board's workload at the end of the process.
Yes, it's important to move things quickly, but it is much more important to get things right from the beginning. This goes to the issue of why so many decisions are varied at the department's review level and at the board's level. That's the question the department asked McInnes Cooper to address in 2007.
In reviewing the adjudication process, McInnes Cooper found that decisions were varied at the department's review level on the basis of additional evidence that was often in existence at the time of initial application, but was not included with the application. In the view of McInnes Cooper, “The adequacy of claims preparation at the initial application and first-level decision stage is driven by the fact that, whether by accident or design, there is greater focus on turnaround times and/or productivity.”
As for the variance of departmental decisions at the board level, McInnes Cooper identified three contributing factors: personal testimony, spirited advocacy by a pension advocate, and new evidence.
The fact that decisions are varied in favour of applicants at each redress level is often given as evidence that the system is working, but it can also be a sign that there is a problem at the beginning of the process. I am convinced that if more time and assistance were provided to applicants to ensure that all needed information was available before moving forward to adjudication, the board's workload would be greatly reduced and it would be able to concentrate on complex cases.
Moving on to the third step, I would submit that future discussions on matters pertaining to the disability benefits process should look at the entire process, encompassing processes of both the department and the board.
With respect to the fourth step, the effect of not liberally construing the legislation is affecting not only the efficiency and effectiveness of the entire system, but it is adversely affecting the lives of too many of our veterans and their families.
If legislation pertaining to veterans was liberally construed at the front end of the decision-making process, as was the initial intent of legislators such as you, I believe we would not be seeing the problems that we see today at the back end of the process. Educating departmental adjudicators and board members on the meaning and application of the phrase “liberally construing” is critical, even more so given that military service and the documentation of such service often creates difficulties.
In the end, we should be aiming for a more streamlined and effective system that will meet the needs of ill and injured veterans and serving members.
As I stated earlier in my remarks, I firmly believe that the Veterans Review and Appeal Board has a critical role to play. Closing the board would do a great disservice to veterans and serving members of the Canadian Forces and the RCMP, but changes to the board are needed to restore the trust in the organization and ensure fairness in the redress process.
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Peter Dobell
View Peter Dobell Profile
Peter Dobell
2012-05-02 15:32
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Good afternoon, to all of you.
You've invited the two of us to comment on two papers we have jointly written, a large part of them by Martin. I should let you know in advance that I got him started. The two of us have very different backgrounds as your chairman has just pointed out, but we worked together very cooperatively a number of years ago. Because we have different experiences we're going to speak in sequence, if that's satisfactory. We'll make a few remarks each.
Initially let me say that our writing, and my earlier writing before Martin joined me, was prompted by distress at Parliament's ineffective review of the estimates and its inability to detect and point to any misexpenditure of funds.
Before Martin Ulrich joined the centre I had already expressed concern that the estimates were being ignored. The fact that I was writing about this led John Williams, very soon after he was elected in 1993, to ask me to appear before a group of colleagues from the Reform Party—not a committee meeting—to talk about the situation. That's an example of how he got started and made it a kind of life work. It was only after Martin joined the centre that we were in a position, drawing on his experience—over 30 years in Treasury Board—to suggest ways that Parliament might propose of improving the situation.
I should say that the two of us have been much impressed by the quality of the speakers you've had, and their knowledge. I know many of them and I can affirm that you've made the right choice of people to come here. I'm not so sure about today, but anyway, it's not only the fact that you have had good speakers but the time you have devoted to looking at the problem.
You have managed to work in this Parliament fairly cooperatively, which is a bit unusual. I think it's going be a matter of how far you can draw on your experience to suggest satisfactory ways of improving the situation.
With Martin and I, a lot of the work we've done involved going to members of Parliament who were then in office to try to see how they were working. The conclusion we reached very quickly, and it's one of the things we wrote about, was the need for a substantial, what we called, financial service.
To be candid, we actually envisaged a much larger service than I'm sure you're going to be able to get. We were thinking about up to a dozen individuals with extensive experience in government financial services who could understand the complexity of government finances, which are really pretty difficult to penetrate.
The proposal we have proposed has been supported by a number of your witnesses, I'm happy to say. Indeed Kevin Page, along with his colleagues who came here, is an example of the kind of person we think should be in the financial services.
The only difference is that I think he should be reporting directly to Parliament, perhaps even to your committee, and I would like to see him reporting to you rather than reporting to the media.
Second, I'd like to see him taking some time to decide to take direction from you as to what subjects to work on, rather than deciding himself what's needed.
In our study, the one which we wrote for the IRPP, we advocated that committees on estimates should continue throughout the year. In effect, we share the opinion of those who say that it's a mistake to terminate the inquiries on May 31.
In our papers, we concluded that it would be more effective if, rather than looking at the annual estimates only in the spring, members were to concentrate right from the beginning on examining individual programs. This way you would get some sense of whether the performance on each program corresponded with what you perceived to be the public's needs and expectations.
We've been asked to report our conclusions in our study prepared for the Gomery Commission on the sponsorship scandal. It reminded me, when we received this request, that although we wrote that report with some hopes that someone would pay attention to it, as far as we are aware, this is the first parliamentary attention that's ever been given to that report.
I mention this because I hope that the report you will be preparing will have impact and will not be ignored the way ours was. In other words, come up with a report that has some chance of getting some parliamentary support and public support.
If your report has a positive and constructive tone, especially if it has the support of members from all parties, which is pretty hard to get but worth trying for, its chances of being seriously considered by government will be greater.
Bob Marleau was quite right in suggesting that conclusions with a positive tone that proposed ways to improve a program were more likely to be taken seriously by the ministry. It may take time. It's not something that's going to happen immediately, but it's worth considering whether that's something you could do.
Over the years that I have been observing—and they are substantial, as you mentioned—and working with parliamentary committees, I can advise you that I know of instances where a report that had the support of all parties had an extraordinary effect on the government. If opposition members on a committee, rather than looking for ways to attack the government, were to work with government members on ways to improve the effectiveness of government operations—to use words that you have already heard from Joe Jordan—you could jointly establish a base for demonstrating to the public that it was getting value for money for a program, something that the government might respond to if you agreed on ways to improve it.
Thank you.
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Helen Cutts
View Helen Cutts Profile
Helen Cutts
2011-10-05 15:32
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I am pleased to be here. My understanding is that as you embark on your work on the north, it would be useful for you to have a briefing on how environmental assessment works. My purpose is go to over a deck; I don't have any prepared remarks. I will review the deck, which explains the Canadian Environmental Assessment Act and how it works, and I'll be very happy to answer your questions.
Turning to slide one, you can see that environmental assessment has been in place in one way or another since 1974. It was a very thin cabinet directive at that time. It wasn't until 1995 that we brought the Canadian Environmental Assessment Act into force. Since then, we've had one round of parliamentary review, and we brought in amendments by 2003. We had a small round of amendments in July 2010. That was part of the jobs and economic growth package that came with the budget that year.
Before I get into slide three, I want to emphasize that environmental assessment is a planning tool. It's a way for the government to work with companies such that before a shovel goes into the ground there is a discussion of what the environmental impacts are and how to mitigate them. This is beneficial for proponents because they get to see early on what changes in design they might need to make or what adjustments to their strategy might be needed before they invest a great deal of money.
The act itself applies to federal authorities. It asks those federal authorities to carry out assessments. These are departments and agencies, typically. There are a number of limited conditions under which those authorities are asked to carry out an environmental assessment having to do with whether a decision is required from them on a project. If they are the project proponent or if that department or agency is offering some sort of financial assistance, then they need an environmental assessment--or if they are a source of land, or if they are a regulator.
The regulation is a very common one. A company that needs to get a permit related to fish would then go to DFO and would indicate that they believe they need an environmental assessment.
We have three types of environmental assessments. Those are screenings, comprehensive studies, and review panels. I'll briefly go over each of these three types.
Most of them are screenings; these are required for any project. Our act works such that any project requires an environmental assessment, and then we have a tier that says a subset of the projects we will name requires a more comprehensive approach. Those will need comprehensive studies.
The vast majority of our environmental assessments are screenings, about 6,000 a year. The responsible authority, the one with the decision to make, is the one that carries this out. We end up with 40 or 50 different agencies involved across the board. They make a decision about what type of opportunity they want to give for public participation, they determine whether to require a follow-up program of the proponent, they make the final decision, and they're also responsible for the implementation of the mitigation measures and follow-up.
Just as an aside, I'll explain what follow-up is. Follow-up means that somebody needs to verify that the particular mitigation measures that were set out in the environmental assessment are doing what they were expected to do. This is a little different from enforcement. If we felt there was some concern about the habitat and said the company needed to make an adjustment, needed to build a ditch to ensure that the water flow was in the right direction and beneficial to the fish or other habitat that use the stream, then you would want to make sure that building the ditch did indeed divert the water and create the level of water that you expected to be sufficient when you set out those plans.
A comprehensive study, as I mentioned, is a more intensive and generally thicker document that looks at environment assessment. It meets the same types of criteria as a screening, but it has a few additional elements; for example, it would be required that you look at alternative means of carrying out the project.
The agency to which I belong is responsible for most of the comprehensive studies. The only exceptions are the ones that involve the Nuclear Safety Commission or the National Energy Board.
With comprehensive studies, one thing that is different from screenings is that we have a participant funding program; therefore, if an aboriginal group or an environmental group or a citizen would like to participate in some way and needed some funding for some research or to collect the views of their members, they can apply to us for participant funding. That's an important element of our comprehensive study program.
At the end of a comprehensive study, it is the Minister of the Environment who has to make a decision, deciding whether or not there are significant adverse environmental effects from the project. That decision would be based on the project as modified; it would not be based on the original project but on the project as described in the comprehensive study, taking into account any design changes and any mitigation plans.
Though the Minister of the Environment has that responsibility, it would still be a particular department that would be responsible for ensuring that those mitigation measures were taken. Often, as I say, it might be the Department of Fisheries and Oceans because the issue at hand was an issue surrounding fish habitat, for example. The follow-up programs under a comprehensive study are mandatory.
The third way we do environmental assessments involves situations in which the Minister of the Environment appoints independent experts, who will do research, call upon witnesses, hold hearings, and make recommendations to the government. This is another case in which we offer participant funding. The role of the agency in this particular case is limited to being a secretariat for that panel.
In the end, the responsible authority, the one with the decision to make, makes the final decision, with the approval of the Governor in Council. Again, the responsible authority checks to make sure that the mitigation measures are undertaken and that follow-up is done to ensure that mitigation is working as planned.
The last element I would like to flag to you today is on federal-provincial cooperation. The environment is really a shared responsibility between the federal government and the provinces. Many of you will already know that the provinces have their own environmental assessment processes.
This situation has the potential to create overlap and duplication. It is difficult for proponents if they have to respond to two sets of requirements. What we try to do is work with the provinces to run a process that is as seamless as possible. In order to facilitate that process, we have bilateral agreements with a number of provinces that set out how we would run a particular project when we are working together.
When we get into these cooperative arrangements, it's usually the provinces that take the lead and we participate actively.
That is simply the nuts and bolts of the Canadian Environmental Assessment Act, and I'd be pleased to answer any of your questions.
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