Mr Chair, I'm pleased to discuss our recent audit reports, which were tabled in the House of Commons on Tuesday, but before I describe each audit, I want to stress that right now is a critical moment when the federal government needs to reflect on what I call “incomprehensible failures” and on how government culture stands in the way of achieving successful results for people.
In our audit on the Phoenix pay system, we concluded that the project was an incomprehensible failure of project management and project oversight.
We also presented two audits that examined programs for indigenous people. When I put the findings of those two audits together with the findings of past audits, I also have to characterize as incomprehensible the failure of federal government programs to help improve the situation of indigenous people in Canada.
[Translation]
I will now describe what we found in each of our audits.
The first audit assessed Indigenous Services Canada's progress and reporting on closing socio-economic gaps between on-reserve First Nations people and other Canadians.
For years, governments have committed to closing these gaps. Nevertheless, Indigenous Services Canada did not have a clear picture of the size of the gaps, and did not know whether progress was being made to close them.
We looked specifically at education, and we calculated that the gap between on-reserve First Nations people with at least a high school diploma and other Canadians widened between 2001 and 2016.
[English]
Indigenous Services Canada made poor use of the education data it collected. For example, the department spent $42 million over four years to prepare first nations students to enter post-secondary education programs. However, only 8% of those enrolled actually completed this preparatory program.
Despite these poor results, the department did not work with first nations or education institutions to improve the success rate.
The second of our audits on indigenous programs looked at Employment and Social Development Canada's efforts to help indigenous people build the skills they need to find jobs and stay employed.
[Translation]
Despite spending over $300 million a year, we found that Employment and Social Development Canada did not know to what extent its programs helped Indigenous people find and keep jobs. For example, while 16% of Indigenous clients received five or more services, the department could not tell whether these clients made progress in finding and maintaining employment.
Our next audit examined how Global Affairs Canada responded to requests for consular assistance from Canadians abroad.
We found that the department deployed staff to help Canadians during a crisis in a foreign country.
However, we also found that the department took too long to assess signs of mistreatment or torture of Canadians detained abroad.
[English]
In 2004 Justice Dennis O'Connor said that Global Affairs Canada needed to train its staff to identify signs of torture and mistreatment, and needed to quickly inform the minister of those cases. More than a decade later, we found that the department gave consular staff only general training on how to conduct prison visits and assess whether Canadians had been tortured or mistreated. In one case, we found it took seven months before the department informed the minister.
[Translation]
Our next audit examined whether the Canadian Armed Forces efficiently administered the military justice system.
[English]
We found that the Canadian Armed Forces often took too long to resolve military justice cases, whether they were for minor discipline offences that led to summary trials or for allegations that were tried before a court martial. The Canadian Armed Forces had to drop 10 court martial cases because they failed to move them along as quickly as they should have. Delays run counter to the right of an accused person to have a speedy trial, and they leave victims and their families waiting for answers.
The Canadian Armed Forces has known about these problems for at least a decade, but has failed to correct them.
[Translation]
Our next audit looked at how some federal organizations disposed of their surplus goods and equipment.
We found that, in the year ended March 31, 2017, government organizations sold assets for $50 million. However, the estimated value of keeping and reusing those assets was $82 million.
[English]
The Canada Revenue Agency implemented a system to reuse its own assets, which allowed it to save $4.5 million over three years. This shows that the government can save money through the prudent reuse of its assets.
Let's turn now to our audit of the government's project to replace the Champlain Bridge in Montreal.
[Translation]
We found that the decision to replace the Champlain Bridge should have been made years earlier. Delays in making this decision cost taxpayers over a half a billion dollars.
The audit found that Infrastructure Canada's analysis of a public-private partnership approach to the project was done after the government announced that it would use that approach. We also noted weaknesses in the department's analysis. A thorough analysis would have found that there was a high probability that a public-private partnership would be more expensive than a traditional procurement approach.
In our opinion, the new bridge will be more expensive than it would been if the replacement decision had been made earlier, it will cost more than originally planned, and it is uncertain whether it will be completed by the December 2018 deadline.
[English]
Our final performance audit was our second audit of the government's Phoenix pay system. This time we looked at whether the decision to implement the pay system was reasonable. We concluded that the Phoenix project was an incomprehensible failure of project management and project oversight. This meant that the decision to launch Phoenix was wrong.
In order to meet budgets and timelines, Public Services and Procurement Canada decided to remove critical pay functions, curtail testing, and forgo a pilot implementation of the system. Phoenix executives ignored obvious signs that the Miramichi pay centre was not ready to handle the volume of pay transactions and that Phoenix itself was not ready to correctly pay federal government employees. When the Phoenix executives briefed the Deputy Minister of Public Services and Procurement Canada that Phoenix would launch, they did not mention significant problems that they knew about.
[Translation]
Finally, the decision to launch Phoenix was not documented. In our view, based on the information available at the time, the decision to launch Phoenix was not reasonable. Phoenix does not do what it was supposed to. It has cost hundreds of millions of dollars more than planned, and it has affected tens of thousands of federal government employees and their families.
Let's turn now to the results of our audit work in Crown corporations. Since the fall, we completed audits of the Canadian Museum of Human Rights, the Great Lakes Pilotage Authority, Ridley Terminals Inc., and Export Development Canada.
[English]
We found significant deficiencies in all of these corporations. In the case of Ridley Terminals, the issues we noted were so widespread that it meant that the corporation operated outside the prudent practices expected of a crown corporation. These issues were further compounded by Transport Canada's ineffective oversight of the corporation.
Our commentary on the 2016-18 performance audits of crown corporations explores important problems that we found in the four audits I just mentioned and in nine others that we've completed since 2016. For example, we're very concerned that eight crown corporations had a significant number of board members whose terms had expired.
[Translation]
I also want to mention that you can find on our website a commentary and video on our 2016-2017 financial audits of government organizations.
Before I answer questions, I want to once again stress the need for the government and the public service to look at these audits differently, not just as issues we found in different programs, but as symptoms of a much deeper culture issue.
Departments can implement our recommendations and deal with the symptoms we've raised, and that is important. But the real question for the government to think about is why do we keep finding and reporting serious problems, and why do incomprehensible failures still happen?
[English]
Mr. Chair, that concludes my opening statement. We'll be happy to answer any questions you may have.
Thank you.
Mr. Ferguson, thank you for the work you and all of your team are doing to allow us politicians to better understand the reasons behind the issues, to identify the problems, and to help solve them.
I carefully read all of your reports, including what we here call chapter zero: the message from the Auditor General. I must admit that I have an internal perspective, since, as I already told you, I spent a number of years in the federal public service. I know full well that all the public service employees, or the vast majority of them, work very hard every day to ensure that the programs and activities they are tasked with are implemented. Nobody seeks to intentionally create a fundamental problem like the Phoenix pay system.
Still today, my thoughts are with the public servants affected by the major problems associated with Phoenix. For some, these financial problems have caused all sorts of other family problems. My thoughts are with them.
Auditor General, in your report and your message, you talk about a culture of obedience that could be the source of Phoenix's problems. I'm scratching my head, and I'm trying to understand the situation correctly. Is it possible that all of the adverse conditions came together? In fact, we had a system that was more than 40 years old. I don't want to play politics, but I must say that we also had a strategy aimed at reducing government spending, meaning that this project was supposed to bring about substantial savings. Many public servants and advisors were going to retire. Some of them had to retire due to cuts that had to be made. Services needed to be centralized in Miramichi, and almost all of the employees were new hires.
I think that there is obviously a link to the culture of obedience, but we have to take all the other factors into account. Instead of talking about this culture, should we not be talking about a perfect storm of adverse conditions?
That brings me to another question.
Public servants have carried out major projects in recent years, including a project that, in a sense, laid the groundwork for Phoenix. This project to modernize federal public servants' pension services was carried out very successfully, the proof of which was the more than 800,000 former public servants now receiving a pension thanks to this system. This program is managed by a team of public servants in Shediac, mostly, with others working in Ottawa.
In your report, you attributed Phoenix's failure to three individuals. Obviously, senior officials, senior public servants, deputy ministers and associate deputy ministers also participated in developing and carrying out this project. In your report, you say that various meetings took place with approximately thirty deputy ministers and associate deputy ministers from different departments. However, since you're saying that they weren't part of the project's official governance, it would seem that you are absolving them of their responsibility for the problems associated with Phoenix.
Can you explain your point of view?
I'll be honest with you. If I were a deputy minister or an associate deputy minister, and people told me that there were major problems with this type of project, and that there would potentially be consequences for my employees, I would obviously raise my hand and say that there is no way we are moving forward with this project.
Explain to me why you are putting the blame on three individuals instead of on the number of people with important positions who had a role to play in this.
Thank you to the Auditor General and your team for the incredible work that is being done on all of the reports and, in fact, for the message from the Auditor General.
I'd like to begin my remarks before asking any questions or making any statements by saying that we are incredibly proud of the public service that we have, of the work that they do throughout this process of understanding—or at least trying to understand—what happened with the Phoenix issue specifically. It is in no way an attack on our public service.
It's the opposite, because there are so many people within our public service who have been run afoul financially through the problems that were created with the Phoenix system. All of us have had people come to our offices, I'm sure, and hearing some of the stories and the issues it created was heartbreaking at times, especially around Christmas when there were, quite frankly, paycheques that just didn't show up.
Mr. Auditor General, I just want to say that this message, the introductory message to the audits that were completed, is one of the strongest, if not the strongest, document I've seen since I became a member of Parliament. I think that it represents what people in the public view as what is wrong with government, whether it's an individual or a business. It touches on the lack of measurables or the wrong measurables being in place for announcements, new programming, or spending. It touches on the amount of work that our public service has to do, kind of watching their behinds, and the amount of work that creates for people who are dealing with those government services.
There are a number of items I wanted to touch on. Before I do, your opening comments today on page 2, I believe, was, “Indigenous Services Canada made poor use of the education data it collected”. It goes on to say, “However, only 8 % of those enrolled actually completed this preparatory program. Despite these poor results, the Department did not work with First Nations or education institutions to improve the success rate.”
It is without reason why we're not taking these stats, which are abysmal—abysmal doesn't describe what they are—and not turning it into a process review to come up with a way to have better back-end results for the people who the Government of Canada, in whatever department, is serving.
We saw that message carried out in your message here where it speaks about Indigenous Services:
A long-term view has to dominate that file, but because it usually only brings political problems in the short term, government tries to stay in the safe space of administering payments instead of being an active partner with Indigenous people to improve outcomes. The measure of success has become the amount of money spent, rather than improved outcomes for Indigenous people.
Further down you say:
The result is an obedient public service that tries to eliminate risks and mistakes, which of course is not possible, so it has to try to avoid responsibility for those mistakes.
In this culture, for a public servant, it is often better to do nothing than to do something that doesn't work out. If, however, action can't be avoided, people search for plausible deniability—a way to deny responsibility for a mistake.
The culture that you speak about in this document, the culture of the entire government.... Yes, you are talking about some specific audits that took place in Phoenix, where you talk about the catastrophe that is Phoenix, but really, you talk about government as a whole, the culture within the Government of Canada as a whole.
The premise for it is that the politics are done on such a short-term view, recreating a long-term issue within government as a whole in terms of change management and so on and so forth.
You end this by saying that you don't have the answer, essentially, but hopefully by identifying that the issue exists, that will be the first step.
Could you provide us with a couple of instances of previous audits that you were thinking about when you were putting these words together, in which you have provided the audit, the process changes have either been put in place or not put in place, and yet we still have the exact same results?
Thank you, Mr. Ferguson.
I want to mention at the outset the enormous respect I have for the work that you and your predecessor did on shining a light into the black hole that was indigenous affairs and is now Indigenous Services.
This day is the eighth anniversary of the death of Shannen Koostachin, who was the youth leader who had never seen a real school, living in a country like Canada. She fought for education. I find it appalling that after every report your department has come out with we're still talking about the “incomprehensible failure”. If a department refuses to put the interests of children first, there's nothing “incomprehensible” about the failure. This is a predictable outcome. What's “incomprehensible” is how governments and departments year in, year out could have such a disregard for children, the children of Canada.
I want to start off looking at page 13, where you talk about the importance of literacy. In 2013-14, Indigenous affairs, for the first time that I ever remember, did a report on the “Success” program, in which they listed literacy and numeracy rates. In the Ontario region, the literacy rate for boys was 21%, and the numeracy rates were 18% for boys and 20% for girls. For the Waterloo public board, the literacy rates are 85%, and yet the department at that time announced in the same report that they were discontinuing keeping track because they thought the money could be spent better elsewhere.
I ask you, with your concerns about literacy, what better thing could a department that looks after children's education spend money on than finding out whether or not children can read?