Government Operations Committee on May 15th, 2008

[The Chair, Liberal, Diane Marleau]

I'll call the meeting to order.

I want to welcome Madame Fraser and her team.

It isn't the first time you've come before this committee, and hopefully it's not the last. We always enjoy your presence. You know how it works. We'll let you go ahead.

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you, Madam Chair.

We are very pleased to be here today to present a summary of our May 2008 report that was tabled in the House of Commons on May 6. My apologies to those members who are also members of the public accounts committee, because they will be hearing all this for a second time. I am accompanied by assistant auditors general Ronnie Campbell, Doug Timmins, and Mark Watters.

The report addresses a variety of issues that affect Canadians. We have also presented an overview of our special examination practice of crown corporations, and for the first time the key findings of recent special examinations.

In a special examination, any major weakness in a corporation's key systems and practices that could prevent it from safeguarding and controlling its assets or managing efficiently, economically, or effectively is reported as a significant deficiency.

Since we last reported on Crown corporations in 2000, we have seen a marked decline in the number of corporations with significant deficiencies.

We are pleased at the improved results we are seeing in Crown corporations. We hope that presenting annual summaries of our key findings will be useful to parliamentarians.

Turning now to results of our performance audits, starting with the government's management of fees charged to the public and industry.

In 2006-07, federal departments and agencies reported collecting about $1.9 billion in fees, for anything from a passport to a licence for manufacturing pharmaceuticals. The fee, charged for a good, a service, or the use of a facility, must take cost into account. We found that Parks Canada is a good example of fee management. Its entry fees are based on the full costs of the related programs.

However, we found that some federal organizations do not adequately consider cost, and in fact some do not know the cost. As well, the total amount collected from a fee for a service should not exceed the cost of providing that service. In Foreign Affairs and International Trade Canada, we found that for a number of years revenues from the consular services fee that is part of the charge for an adult passport exceeded the costs of the activities set out in the Treasury Board approval.

One of our audits looked at the support provided by National Defence for the Canadian Forces' deployment to Afghanistan. We found that National Defence has been able to deliver its equipment and supplies to troops in Afghanistan who need them. However, there have been some delays in moving supplies to Afghanistan.

We also found that some key equipment has been difficult to maintain because of shortages of spare parts.

Moreover, the supply system does not provide enough information to track the arrival and whereabouts of ordered items. This has resulted in losing track of some items needed for operations.

So far, the military has been able to adapt and adjust so that operations have not been significantly affected. But unless the problems we found can be resolved, the Canadian Forces could have increasing difficulty supporting the mission.

Another chapter of the report looks at Transport Canada, which is in the process of changing its approach to the oversight of air transportation safety, a requirement of the International Civil Aviation Organization. This means that Transport Canada's focus will shift from traditional oversight, such as conducting inspections and audits, to assessing the safety systems that aviation companies themselves have in place. Although Transport Canada deserves credit for being the first civil aviation authority in the world to introduce regulations for this new approach, we found weaknesses in several areas.

We found that in planning the transition the department did not formally assess the risks involved in the change or forecast the cost of managing it. Nor has it measured the impact of shipping resources from traditional oversight activities to the new approach. The first part of the transition affected 74 airlines and aircraft maintenance companies. The rest of this transition process will be more complex to manage, with over 2,000 smaller companies affected. We hope our recommendations will help Transport Canada to complete this change successfully.

In this report we also look at the First Nations Child and Family Services Program of Indian and Northern Affairs Canada. Government policy requires that services to First Nations children on reserves meet provincial standards, be reasonably comparable with services for children off reserves, and be culturally appropriate. Funding for the services needs to match the requirements of the policy.

We found that the Department does not take sufficient account of these requirements in establishing levels of funding for First Nations agencies to operate child welfare services on reserves.

The Department's funding formula dates back to 1988. It has not changed significantly to reflect variations in provincial legislation and the way child welfare services have evolved. In addition, the formula assumes that all First Nations agencies have the same percentage of children in care and that the children all have similar needs.

In practice, the needs of children in care who are served by First Nations agencies vary widely. The outdated funding formula means that some children and families are not getting the services they need.

We turn now to the Public Health Agency of Canada, created in 2004 and now responsible for leading federal efforts in the surveillance of infectious diseases.

Well-informed and rapid public health actions based on effective surveillance can prevent and contain outbreaks, reduce the economic burden of infectious diseases, and ultimately save lives. We found that while the agency has surveillance systems in place, weaknesses in some aspects of surveillance have remained since we last reported them in 2002. For example, except for Ontario, the agency has no formal data-sharing agreements or protocols with the provinces and territories. Formal agreements would help ensure that the information the agency receives is timely, complete, and accurate, so that it can better respond to a disease outbreak.

One of our audits examined the conservation of official residences.

These residences are more than housing provided to the country's senior government leaders. They are part of Canada's heritage and need to be preserved.

We found that the National Capital Commission has improved the condition of most official residences in recent years, although further work is needed at Rideau Hall.

However, the Prime Minister's residence at 24 Sussex Drive has had no major renovations for fifty years.

The NCC estimates that completing the needed work would require full access to the residence for 12 to 15 months. It has a schedule for the planned repairs. Delays are likely to result in further deterioration and higher costs.

Finally, let me turn to our chapter on the Canada Border Services Agency. Since its creation in 2003, the agency has been responsible for detaining and removing individuals who enter Canada illegally or who pose a threat to Canadians. We found the agency has made progress in certain areas, but it needs better processes for detentions and removals to ensure that individuals are treated consistently. The agency does not monitor its detention and removal decisions across the country to ensure they are consistent. We also found it does not collect and analyze enough data at a national level to properly manage detentions and removals.

The agency has improved its tracking of individuals. It has established a database of 63,000 people with removal orders and it knows the whereabouts of 22,000 people who have been ordered to leave Canada. Although a growing number of people might still be in Canada illegally, the good news is that the agency is focusing its available resources on the higher-risk individuals.

Madam Chair, that concludes our opening statement. We would be happy to answer any questions the committee members may have.

Thank you.

[The Chair, Liberal, Diane Marleau]

Thank you, Madam Fraser.

We'll start with Mr. Holland.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Thank you, Madam Chair.

Thank you, Madam Fraser. Your presentation does sound a little familiar, having come from the public accounts committee.

Thank you again for coming today.

We're specifically looking at federal properties, I know, but I also know the chair gave us the opportunity to broaden that a little bit. However, it is federal properties, so I think I'll start there--and that's where I finished, actually, at the public accounts committee, in the questioning I had.

I'll come to the second part of my concern later, but my first concern is about the official residences, which are obviously more than simply residences. These are extremely important symbols of our nation and pieces of heritage that are owned jointly by all Canadians.

In particular, I think 24 Sussex is really deteriorating. You've mentioned the fact that it hasn't received major renovations in 50 years. I've had the occasion to go through it in winter, an interesting experience.

I'm wondering if you can enumerate for us the costs, as they stand now, and what those costs would be if the work is put off. In other words, what are the ramifications? From what I've heard or what I understand, this house is beginning to rapidly deteriorate, as is any home that's not properly maintained. What's the timeframe in which we need to deal with this before we start running into major concerns about really undermining this property?

[Sheila Fraser]

Thank you.

The current estimate is about $9.7 million to bring the residence up to what is considered an acceptable level. That is an estimation that has been done by the National Capital Commission with their experts. To my knowledge, they have not done any kind of estimate. I think that would perhaps be difficult to do, because it would depend upon how long the delay was, what additional deterioration might be caused, and of course the increased costs of tradespeople, supplies, and all the rest of it.

I think we can all accept that as projects are delayed into the future, there is an increase in cost simply because of inflation often, and there could be additional deterioration to the residence as well.

[Mark Holland, Liberal, Ajax—Pickering, ON]

The response of the Prime Minister at this point has essentially been that he's not leaving; he's staying put and he's not going to vacate the house for any period of time to allow repairs.

Has there been any kind of positive response to this? How do we ever break that? If we have prime ministers saying “No, no, this where I want to be” because of the symbolism and they don't want to lose that symbolism, how do we get to a point where this is ever going to be fixed?

I see within my own riding federal properties, heritage buildings that are not properly maintained. At a certain point there is a tipping point where that deterioration is not salvageable, or you do irreparable damage to the property. When we're talking about 24 Sussex and we're talking about a property of that kind of historic significance to the nation, does that not become a real risk? Are you getting any kind of indication that this is going to be solved?

[Sheila Fraser]

Madam Chair, that really would be questions for the National Capital Commission, who are responsible for managing this and could perhaps give the committee a better sense of how urgent it is. They have indicated that these repairs need to be done soon, on a fairly urgent basis.

As we mention in the report, there have been no major repairs for 50 years. All of the systems, electric, plumbing, all need to be changed. There is no central air. The windows need to be redone. The list goes on and on. And many of the systems are at their capacity. So it's becoming urgent to do repairs there.

Obviously, the commission, the Prime Minister, and his representatives and his family will have to work together to find a solution that is satisfactory to all.

[Mark Holland, Liberal, Ajax—Pickering, ON]

But you're not aware, at this point, of any solution having been offered.

[Sheila Fraser]

No, I'm not aware of that.

[Mark Holland, Liberal, Ajax—Pickering, ON]

This doesn't fall within this report, but it does certainly deal with federal buildings. Is the parliamentary precinct, in general, something you have looked at? That seems to be something of an ongoing nightmare as well.

In the building we're in here, there are asbestos concerns. It's falling apart to such a degree that we have scaffolding all over it so the bricks don't fall out and land on people's heads. We've really allowed it to deteriorate to a tremendous degree. I wonder if you have any comments on that, or is that something you've reviewed?

[Sheila Fraser]

The office did do an audit of that, I believe, in about 2000--1999, 2000, or 2001.

We are planning to do an audit, which we will be tabling in 2010--isn't that right?

[Ronnie Campbell, Assistant Auditor General, Office of the Auditor General of Canada]

Yes.

[Sheila Fraser]

We will be starting that toward the end of this year.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Hopefully there's going to be something left of these buildings in 2010, by the time that audit is completed, because these are extremely important symbols and they're just not being invested in. Working here throughout the week, you get to appreciate the history of them, but you also get to appreciate the sad state they're in. I'm deeply concerned about that, so I look forward to your report in that regard.

Thank you.

[The Chair, Liberal, Diane Marleau]

Thank you.

You have the floor, Ms. Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Madam Chair.

Good day, Ms. Fraser, gentlemen. It's always a pleasure to have you here.

Once again, you have issued a very powerful report, especially as we were unaware of the state of repair of 24 Sussex Drive. Apparently, the NCC has not said very much about the fact that this official residence is in need of repairs.

How do you explain that fact? Why all of sudden is the cat being let out of the bag?

[Sheila Fraser]

As mentioned in the report, our Office conducts special examinations of Crown corporations every five years. We have just wrapped up a special examination of the NCC. This report is more of less the result of this special examination.

Naturally, we broadened the scope of our examination and also looked at La Citadelle, which is managed by Public Works and Government Services Canada, not by the NCC.

This audit also reflects our concern for heritage matters. Additional audits looked into the records conservation practices of the Library and Archives Canada.

The conservation of official residences ties in with this review.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Have you been in touch with NCC officials? Have you asked them why the NCC did not disclose sooner that repairs were needed? It would appear that the residence is in need of some major repair work.

Do you know the reasons for the NCC's actions?

[Sheila Fraser]

No, we do not. Obviously we were critical of the NCC for failing to disclose the true state of repair of all of its residences.

In fact, that is one of the recommendations that we made: we called for greater transparency as to the condition of the residences. The NCC accepted this recommendation.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Nevertheless, the repair bill will be enormous. The work will take some time to complete and the occupants will even have to relocate temporarily. We know how that works. When we have major work done to our own homes, often we have to move out for a few days.

I do not want to back you into a corner, but it's also a matter of responsibility. Do you not find that the Prime Minister is being a little irresponsible by refusing to vacate the premises? What is even more irresponsible is that an imposing residence like 24 Sussex Drive is costing the taxpayers additional money, if only for heating?

In your opinion, is the Prime Minister standing firm because of policy considerations, or is he merely being irresponsible?

[Sheila Fraser]

The answer I received from the Prime Minister is that he will not vacate the premises before the next election. As I see it, it's up to the NCC and to people in the PMO to find a solution and obviously, to find a suitable residence that meets the needs of the Prime Minister and his family, as well as any security requirements.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Do you know if the NCC has a residence in mind?

[Sheila Fraser]

You would have to put that question to the NCC.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Even though this is not the committee's exact mandate, I would like to focus on your entire report and the spirit behind it.

You seem to have identified some financial problems in each area audited. Perhaps my analysis is off somewhat, but it seems that not enough money is being invested in solving the problems that you have identified in virtually every area.

Am I correct or not in my analysis of your report?

[Sheila Fraser]

Madam Chair, most of the time, it is not necessarily a question of money, but rather, of systems management and practices.

Consider, for example, the supply system in Afghanistan. When parts, inventory and material arrive in Kandahar, a manual system is used. A total of 85 tonnes of material are shipped each week. As you can appreciate, it is very difficult to keep track of everything with a manual system. The last time inventory was taken, $7 million worth of material could not be accounted for. However, additional material not on the list and valued at $6.6 million was found.

The systems would benefit from some additional funding, but it's really boils down to management practices. Agreements need to be worked out with the provinces respecting infectious diseases surveillance systems. Roles and responsibilities need to be clearly defined in the event of a disease outbreak: what data must be shared, with whom and when?There could be some financial implications, but I do not think funding is a problem in this case.