Health Committee on Feb. 7th, 2007

[The Vice-Chair, Bloc, Christiane Gagnon]

Pardon me, Mr. Fletcher. I understand that you would like to question the witness, but your time is up.

Mr. Martin, please.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Madam Chair.

I find both chapter 8 and chapter 10 very interesting, and I thank the Auditor General for bringing them to the committee. Coming from Manitoba, I'm very sensitive to some of the problems with Health Canada's contracts among first nations. As you know, the Virginia Fontaine Addictions Foundation is a lingering sore spot that went on for years and years and years. I think I'll wait to ask my questions on the first nations non-insured benefits, though.

From a regulatory point of view, one of the most valuable things Health Canada does is its regulatory role for safety, etc. I do see that the budget line went up for product reviews as it pertains to drugs. I'm curious, though. Under hazardous substances, and hazardous substances in the workplace, was there a similar bump in the budget for the product review of those things?

[Susan Fletcher, Assistant Deputy Minister, Healthy Environments and Consumer Safety Branch, Department of Health]

We also put more money into enforcement officers and our compliance officers.

Let me just take a moment. The Hazardous Products Act that supports consumer products is a post-market surveillance act; therefore, it permits us to take products off the market or restrict their use in the market. It's not one where we have a pre-market review before something appears on the market.

We do our compliance and enforcement in a couple of ways. Yes, we do have enforcement officers who go out and review the marketplace. But we find our role is more important in what I would call the more upstream work we do, where we work with importers and manufacturers to alert them to the kinds of products that we find problematic. It's in their best interest to make sure they don't come into the country or they're not manufacturing them in ways that people will be injured or harmed by them, because they could be sued. So they want to work with us, and they do.

We also take the opportunity to inform citizens regularly. We have regular advisories on problematic things that we see in the workplace. Like Neil, we work closely with regulators in other countries. We actually share the marketplace with the U.S. We have a very close working relationship with the U.S. Consumer Product Safety Commission. We have a similar database. We see injury projections down there; we take action.

An example of something we managed to work on with the manufacturers recently was small magnet parts. So we can, by working upstream before things get into our marketplace, oftentimes prevent problems.

[Pat Martin, NDP, Winnipeg Centre, MB]

But you must do some testing. You just put out new regulations that say it's okay to put asbestos in children's toys. That was just posted on November 11, so I'm just wondering where that—

[Susan Fletcher]

No, we don't allow asbestos in anything. Asbestos is a prohibited substance. It's a very controlled measure. We have asbestos regulations.

[Pat Martin, NDP, Winnipeg Centre, MB]

November 11, 2006, the regulation was just put in the Canada Gazette that asbestos is okay for use in children's toys, drywall, joint compound, and for spraying on girders and things in buildings such as this. That's what I was getting at.

What kind of pretzel logic would possibly lead anybody to say it's okay to put asbestos in children's toys?

You and I can talk later. I can show you the November 11 Canada Gazette.

[Susan Fletcher]

May I say that I would like to get back to you on that, and I will get back to the committee as well?

[Pat Martin, NDP, Winnipeg Centre, MB]

Fair enough.

On the first nations non-insured health benefits, who were the principals in the company in question, First Canadian Health Management Corporation? What were their names?

[Susan Cartwright]

I don't have their names with me. I don't know if Mr. Potter does, but we could certainly provide them.

[Pat Martin, NDP, Winnipeg Centre, MB]

Who is the ADM who would be dealing with them? Mr. Potter?

[Ian Potter]

Yes, it would be me.

[Pat Martin, NDP, Winnipeg Centre, MB]

Who were they, then?

[Ian Potter]

I will get the details to the committee, but the company is owned by the Tribal Councils Investment Group of Manitoba, which is made up of I think seven tribal councils in Manitoba. So it's not any particular individual.

If the committee is interested in who makes up the board of directors of that company, we could get that information and table it with the committee.

[Pat Martin, NDP, Winnipeg Centre, MB]

You know, it's Manitoba's bad luck, but parallel to this abuse taking place—and I call it abuse when I read what went on in chapter 11—

[The Vice-Chair, Bloc, Christiane Gagnon]

You'll have to wait for your next turn because your five-minute period is up.

Mr. Batters, go ahead.

[Dave Batters, Conservative, Palliser, SK]

Thank you very much, Madam Chair.

Thank you very much to the Auditor General for being here, your staff, and Health Canada officials.

I would like to address, if I may, chapter 8 of your report first. I have a question to the Auditor General.

Program managers indicated to your office that additional funding is required to meet their regulatory responsibilities. Program funding levels have remained constant while demands on the three programs have been increasing.

Has your office evaluated how much more funding would be needed under the three programs to achieve their objectives? Are additional human resources also required?

And in your opinion, are the problems identified in the audit regarding chapter 8 related to a money issue or a management issue?

[Sheila Fraser]

Thank you, Madam Chair.

We did not conduct an evaluation of the funds that would be required. That is not the kind of work we do. We would expect the department to do that as part of their resource allocation.

The point we're making in here is that the department really needs to assess the level of activities and then of course the consequent resources that are needed to carry out its various regulatory programs.

I would just caution, we have indicated the results of interviews with program managers. I would suspect there aren't many program managers in government who don't say they need more money, so I think we have to appreciate that yes, they do say that, but I wouldn't take that as scientific fact. I think there has to be a more rigorous determination of levels of activities that need to be carried out, and the consequent resource is something the department is now working on.

[Dave Batters, Conservative, Palliser, SK]

Thank you very much.

Moving to chapter 10, a chapter dealing with the non-insured health benefits program, although Health Canada has resolved the issues found in your audit, your office felt it was necessary to bring it to the attention of parliamentarians because of the seriousness of the problems raised and, as my colleague Mr. Fletcher said, the length of time, about seven years, that some basic financial controls related to the contract were lacking.

In your view, why did it take so long to adopt financial controls? Was it due to a lack of knowledge about contract management, or a lack of due diligence?

[Sheila Fraser]

I have a hard time explaining that. I think the department has already responded in part. Due to that, people may have thought they were doing it appropriately, and obviously they weren't. In an internal review in 2003, the department started to recognize problems. Given the size of the contract—and from 1998 to 2006 we're talking about over $2 billion being spent without the proper financial authorities—we did think it was important to bring it forward.

[Dave Batters, Conservative, Palliser, SK]

Absolutely, and that's what is concerning me, and certainly I think all members of this committee and Canadians watching at home. There's significant money involved.

Does your office intend to audit the awarding and the management of upcoming contracts in November of this year?

[Sheila Fraser]

We will see. We don't necessarily have it in our plans right now, but we will be following up, obviously, and inquiring with the department as to how that is going.

The issue I should raise, the initial awarding—we were saying we didn't think any of the bidders qualified because the company that did win was a new corporation that had been set up. One of the requirements was that they be able to show financial stability through working capital or other. Being a new corporation, that was difficult, and there were perhaps other ways they could do that, but that was one of the mandatory requirements and it was not met or there was not sufficient documentation in the file to show that it had been met. It was the same with the other bidders as well.

[Dave Batters, Conservative, Palliser, SK]

Just to sum up, in your audit it was an indictment of the department and the previous government in awarding this contract when it shouldn't have been awarded in the first place.

[Sheila Fraser]

That is our opinion, yes.

[Dave Batters, Conservative, Palliser, SK]

Thanks.

Madam Chair, I have one more question for the department officials. Back to chapter 8, “Allocating Funds to Regulatory Programs”, the audit found that the rationale for making decisions about funding under the three programs had not been documented. There was also no documentation showing the impact of funding decisions on program delivery.

Moreover, when the funding level allocated to a program was lower than what was requested by program managers, there was no documentation explaining which activity would not be carried out and how this decision was reached.

How does the department intend to change this situation, and what process will be put in place to document funding decisions and their affects on programs?

[Susan Cartwright]

Madam Chair, as I mentioned briefly in my opening remarks, we have launched a number of activities in response to the recommendations in the report. We've talked a little bit about the reviews we have under way with regard to establishing baselines and understanding the resources we are currently devoting to our regulatory function.

In addition, as a whole of department exercise, we have undertaken two or three other initiatives that relate to the question just posed. The first of those relates to our operational planning process. As I mentioned, we have implemented a new operational planning process that will make linkages among the objectives of our regulatory program, the results we are expecting, and our performance against those results, and that will enable us to make better resource allocation and reallocation decisions in the future.

We have instituted a new budget management framework in the department, which will provide some of the documentation we lacked, as was noted in the report, in terms of resource reallocation and allocation decisions, and the consequences of those decisions, and how the department will have to adjust its own functions in the services it provides to match those resources.

We have also launched some work to look at our cost-recovery mechanisms in the department. As I mentioned in my opening remarks, it's been some time since we reviewed the fees we charge for services, and we think the time is right to have a look at those. So we have a number of cross-department initiatives under way to improve both our operational planning process and our budget management process and to provide the kind of documentation the Auditor General didn't find when she looked for it.