Public Accounts Committee on Oct. 31st, 2006

[Sheila Fraser]

It's a dotted line?

Yes.

[John Williams, Conservative, Edmonton—St. Albert, AB]

It's not dotted in my copy. Do you think we can get a legal opinion on this?

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Shawn Murphy]

Are there any practising lawyers here?

We'll go to Mr. Christopherson, for eight minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

Next we're moving to dangling chads.

Let me just say first of all to Mr. Williams that we need to be a little bit careful about throwing stones, given the glass house we live in. This is a report from March 2004, and we're just getting to it now.

May I also point out, because it's historical for me, that I actually have help here today. My good friend Mr. Dewar from Ottawa Centre is here to join in, given that he covers Treasury Board.

I'm going to welcome you. It's a pleasure to have help here.

I have one question, and then I'll turn it over to my colleague, Chair. My question is to the Auditor General, with respect to page 24 of your report, point 7.94. You go on to talk about the “absolute critical need for the proper resources and tools to meet management responsibilities”.

We know here in particular that not having enough resources will stop you cold right there. One thing I want to ask you, especially in light of the $2 billion in cuts, $1 billion of which have been made public—the other $1 billion is pretty much a place holder—is whether you are satisfied that they not only have the resources they need now, but that none of those necessary resources is on the chopping block. Do you have any sense of that, in terms of these cuts they're making?

[Sheila Fraser]

I'm afraid, Chair, I can't really respond to that. We don't do evaluation work, and I haven't seen any evaluation by the secretariat of its own capacity, which is really what would be needed to be able to respond adequately to the question. Neither have we done an analysis of the cuts.

But perhaps the Treasury Board Secretariat itself can go through—

[David Christopherson, NDP, Hamilton Centre, ON]

Yes.

I think, Chair, at some point that's something we need to come to grips with, especially as we're evolving into new processes, new everything. We need to make sure there are the resources to give effect to them.

I'll turn it over to my colleague.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Chair.

I have a question on the cuts we most recently saw, the $1 billion through Treasury Board. We just got the estimates and are looking through to ferret out some of the cuts.

Do you have any concerns about the sequencing—not, of course, about the cuts, for that's for us to critique—of how they were done vis-à-vis financial reporting? What I mean by that question is, typically we will have the budget and the main estimates, and then we get an update with the most recent supplementary estimates. However, in between these we got the announcement of cuts to programs, and I haven't quite figured out where the money is, if you will, because there might be some transferring within. For instance, I think one department may have cut some programs, but their bottom line hasn't been affected, because there are some transfers within. This makes it very dense and difficult to read.

Have you had a chance to look at it? We just got them yesterday, so I appreciate it if you haven't. Do you have any concerns, not about the politics of it but about the presentation and, if you will, the literacy—pardon the pun—of how we're able to understand and read the document?

[Sheila Fraser]

We haven't looked at it, and I am not sure we would be able to comment on it. In the report that's coming, though, at the end of November, we have an overview piece, and we raise issues about the Treasury Board role in the expenditure management system and how that whole system works. There may be some answers.

I would say more generally that we have raised in several reports the need for better, simpler information to parliamentarians on the estimates and on the financial results more generally. The information presented tends to be very difficult for anyone, even a professional accountant, to understand. The terminology is not necessarily clear, and you often have to refer back to reports on plans and priorities to be able to get it.

I know the government indicated there was a project under way—I'm just not sure where it's at, but they announced it a couple of years ago—to try to simplify and improve the information to parliamentarians. That may be something you would want to take up with the secretariat.

[Paul Dewar, NDP, Ottawa Centre, ON]

I know you had concerns previously about the Treasury Board contingencies and the fund amount—$750 million, I think it is. They have descriptors in this document on it. What were you looking for in your critique before? Can you refresh my memory as to your concerns about the Treasury Board contingencies? Was it how they were being used? Was it the descriptors? Could you elaborate on that a bit, please?

[Sheila Fraser]

This is what we call vote 5. Vote 5 was supposed to be used for—I can't remember the exact wording—exceptional, unforeseen expenditures, or something of that nature. What we found was that in fact many almost recurring expenditures were going through vote 5. For example, much of the expenditure of the firearms system over the years was going through vote 5, and there were other expenditures like that.

We raised the question of what the definition of unforeseen exceptional expenses is. In fact, many of these expenses probably should have been back in the main estimates, not going through vote 5.

I know there were several studies that looked at this. The government gave, at the time, new directives to departments as to what was to go into vote 5. We haven't gone back to look at this, but my impression is that they had made quite a bit of improvement and had narrowed what actually could be charged to vote 5.

[Paul Dewar, NDP, Ottawa Centre, ON]

I note on page 83 of the supplementary estimates that there's one for a grant for an institute for Canadian citizenship. It might be deemed an emergency, but I think others might argue that citizenship is something we work on for the long haul and that it might not be an emergency. There was $1 million put toward that.

There clearly might need to be some tightening in what the government understands to be an emergency and what is in fact an emergency—things that come up that you can't foresee and predict. We all understand that there needs to be money there. It's interesting that now that they have descriptors, you can read and then measure: is this something that was really deemed essential in the interim period?

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Dewar.

Mr. Fitzpatrick, you have three to four minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I'd like to follow up on the point Mr. Williams raised. I think there's another aspect to this whole thing that I find rather astounding in your ninth report.

I view the Comptroller General in a treasury department as being the person to monitor or police things. I think we've come a long way from the days of C.D. Howe, when things were run by the Treasury Board in those days. My understanding is that it was a career-ending move for a deputy minister to try to violate the rules or circumvent things in those days, when they had a genuine fear of the people who were running the Treasury Board.

In this case, what I find remarkable is that you have the acting Comptroller General stating the proper legal position: you must go to Parliament and get the appropriation, or you must report a blowing of the vote. From what I can gather, to shore up his position—not to get into debates about lawyers or accountants—he got a legal opinion that supported this position. Then all of a sudden senior people in other departments said, “Oh, we'll just push you and your opinion aside and we'll get another opinion that will give us a third option, and you just go away and leave us alone.”

It even gets to the point where we get a replacement for the acting Comptroller General, who adopts the second legal opinion and ignores the first. I find that whole process rather distasteful.

I think the Comptroller General and the Treasury Board should have a fair amount of power, and deputy ministers who step out of line in this place should get a good whack from that department. They shouldn't be pushed to the side; there's something wrong with that process.

Am I off the rails with this kind of view, Mrs. Fraser, or is there some legitimacy in the concern here?

[Sheila Fraser]

Well, no. As I indicated earlier, I believe the Comptroller General should have the final say on accounting treatment. But it goes back, again, to the respective roles and responsibilities of deputy ministers and the Comptroller General, and I'm not sure they're as clear as they should be.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Another observation I have concerns the procurement of British submarines—a boondoggle, as it turns out—and also the sponsorship scandal, the HRDC boondoggle, the gun registry, Shawinigate, and a whole lot of other things, which through your office were exposed as the bungling of government programs, and so on.

I go to paragraph 16, where you state the importance of the management cycle. I think the importance of the cycle is that the managers of these government programs and departments should be following a management cycle, and the taxpayers should expect this at the very least from the people who are managing programs, if they have this process in place and we're getting results for our money.

In my view, the Treasury Board should make sure these programs, among many things, are being delivered in accordance with some sound management cycle.

Clearly, in the cases I've identified here, there was an absence of any management cycle. It was just politicians going ahead with some boondoggle, authorizing something, and then closing their eyes to the whole process and hoping that by random luck these things would work out—which they didn't. That's not the way things happen in the world. They happen from good management, sound planning, and so on. This was really an indictment of incompetency at the highest levels of government and management in government.

Do you see the Treasury Board's role as making sure that when we have government programs, the government is following proper management practices and a good management cycle?

[Sheila Fraser]

Again, Chair, that comes back to the respective responsibilities of deputy ministers and the central agencies. We have always taken the position that if the Treasury Board is the one that sets the management policies, they should know if those policies are working or not.

From there, to say that they should take responsibility for program delivery, I would not go that far. I think it is still up to the deputy minister in those departments to assume responsibility for program delivery, and I think that has to be made clearer. It can be one or the other, but it has to be made clearer, because right now people are pointing their fingers at each other.

Personally, I don't think it's fair to say that the Treasury Board Secretariat should be managing all the programs in government. Essentially if we make them responsible for everything that goes wrong, that's what they'll have to do. I really do believe that the deputy ministers in departments have a responsibility, and I think they would acknowledge this for their departments and the management within those departments. It's how you share the responsibility between the central agency and the deputy ministers that has to be clarified.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Fitzpatrick.

Thank you, Mrs. Fraser.

Mr. Laforest, you have no more than four minutes, followed by Mr. Poilievre, for eight minutes.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

For the Treasury Board of Canada Secretariat and the Comptroller General of Canada, what is involved is expenditures of some $210 million. These federal government expenditures are controlled to varying degrees, given the failings in recent years in terms of a number of scandals, as Mr. Fitzpatrick was saying, and hence the need for an auditor or an auditor's office to provide another layer of control or to check whether mistakes have been made.

You check programs or aspects of programs in a department or complete data from a number of departments or agencies.

How many billions of dollars do you believe your audit covers? Out of $210 billion, how many do you audit?

[Sheila Fraser]

I could carry out an analysis and submit it to the committee, but what is needed is a breakdown of the $210 billion.

For example, the crown corporations are included in this amount. Our audit in fact covers most of the crown corporations, and we give our opinion of them. For example, we naturally audit the agreements for many of the transfer payments to the provinces. For certain expenditures, we audit the systems. We audit the government's pay system to ensure that it has satisfactory monitoring mechanisms. We do not audit all the pay cheques, but rather the system.

Furthermore, for other departments, we check wherever there are very large unspent balances and some balances that may constitute a greater risk. We do an analysis of the riskiest budgetary items that require the greatest amount of judgment in establishing provisions for legal action or claims.

In terms of revenue as well, it is obvious that there is some auditing. We audit a significant percentage of transactions, but not necessarily all transactions. We also rely a great deal on the systems.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

The public has lost a great deal of confidence in politics, institutions, and their government because of what has happened in recent years. Of course this audit revealed a number of things. The public became aware of the importance of the role of the Office of the Auditor General.

Is it enough? Should not the Office of the Auditor General demonstrate clearly that its work is truly effective, that it gets to the bottom of things, and that it will serve democracy effectively in the future?

[Sheila Fraser]

We try as much as we can in discussions and presentations to the public to explain our role and the nature of our work, and to demonstrate that basically we operate in a transparent system that also respects the independence of external auditors. This accurately reflects our democratic system, and Canadians ought to be proud of this.

Thus in many of our exchanges, we explain that although some audits identified problems or the need for significant improvements, overall, our public service is very healthy. I can say that it is one of the best in the world, although I have not checked into the matter closely. Our system is rigorous and our public service is highly professional.

In fact, we have noted improvements and also noted that programs are experiencing difficulties. However, compared to other countries, we are doing much better.

[An hon. member]

We can feel better about it?

[Sheila Fraser]

Yes.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Laforest.

Thank you very much, Mrs. Fraser.

Mr. Poilievre, for eight minutes.