Public Accounts Committee on April 2nd, 2009

[Ed Fast, Conservative, Abbotsford, BC]

That's why I wanted to ask you a question about Saskatchewan.

Since we're doing well in the province in trying to come to some resolution where there are third party interests, are there some aspects of that process you would commend to us as a government, or to the Manitoba government, to help us make progress towards perhaps having a more satisfactory process in place in that province?

[Sheila Fraser]

I think it's the involvement of the Saskatchewan region, the regional office there, which actively works with first nations to try to resolve it. They contribute a lot to the process. In Manitoba, unfortunately, the regional offices do not get involved in trying to resolve the third party issues, so at times it becomes a stalemate between the first nation and the third party.

Obviously, I believe there are good practices that could be shared from the Saskatchewan region with the Manitoba region, but first I think there needs to be clarification in the Manitoba region that this is a responsibility of theirs and that they should be trying to resolve these differences.

[Ed Fast, Conservative, Abbotsford, BC]

You also mentioned that some 315,000 acres did eventually devolve to the reserves and that this was a 42% increase. I think in Manitoba alone there was more than a doubling of conversions compared to the previous eight years. I assume that's significant progress.

[Sheila Fraser]

That is good, but there are still over a million acres left to be converted in the two provinces.

[Ed Fast, Conservative, Abbotsford, BC]

I certainly acknowledge that, but this is much better progress than in the past.

[Sheila Fraser]

It's certainly better than it was. It's not over, though.

[Ed Fast, Conservative, Abbotsford, BC]

I have a question related to that. You did make a statement that acquiring reserve lands could serve as a means of improving the standard of living on the reserves. Do you have any plans to assess that in the future? You've made a statement that these conversions could lead to a higher standard of living. Are you accepting it as your role in the future to do a study of that?

[Sheila Fraser]

No. That would not be part of our role, because we don't do evaluation of government programs. If anything, if it is a responsibility, it would be the responsibility of the Department of Indian and Northern Affairs, or perhaps even of the first nations themselves.

We have only included anecdotes or cases that first nations have presented to us that show that, for example, by obtaining the land they were able to expand certain businesses that they had planned or, in the case of one, where they were able to get a potable water supply that had been unavailable to them previously. It's more anecdotal. We would not do that kind of evaluation ourselves.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you so much.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Fast.

I'd like to explore one issue a little more deeply, Ms. Fraser, and that is your status report on the audit of small and medium-size enterprises. You talked about the underground economy. I know that your department did an audit in 1999 and you went back indirectly in 2004.

In my opinion, this is a very important issue because it means that the revenues of the government are less, plus it creates an unlevel playing field, because most people pay their taxes, as you know. There was a request for specific guidelines. Your audit indicates that there's work to be done.

I have a little bit of sympathy for the department, or perhaps they're not handling it right, but I sense out there that for certain areas--construction or child care--there's a certain level of acceptance for this type of behaviour. Until we make it socially unacceptable, it's going to be hard to deal with this issue.

We don't really know how much revenue the country is missing, but I know you did an audit. Do you have any thoughts as to how the country can really address this problem? As a country, I think we rank very high on international scales. We're not second to any other country, but I still think there's a lot of tax revenue that people aren't paying. After this audit, do you have any comments on that issue?

[Sheila Fraser]

I agree with your comments, Chair. This is not something that will ever be completely eliminated, but our point was that with the limited resources of the agency, they should be targeting those files where they have assessed that the risk is the highest.

They have quite an elaborate system, which goes through and, on a case-by-case basis, identifies the additional potential tax revenue. We found that the majority of their audits were not focusing on the higher-dollar accounts, but rather on the lower-dollar accounts. It's really a question of the level of audit effort they're putting into this so that they target the highest risk.

They have made a number of improvements in a number of areas. You mentioned, for example, the construction industry. They've put in extra reporting requirements to try to deal with that.

But we have also noted that sometimes they're slow to deal with the new techniques, I guess, of the underground economy. We mentioned software whereby you can suppress sales in an automated system. It took them several years before they started to train their people on how to identify that and then what to do with it. They need to be more responsive to techniques that can be out there--because people will always be finding new ways of doing this--and then train their auditors to be able to detect these things.

[The Chair, Liberal, Shawn Murphy]

Do you also think there's more need for social marketing to raise the perception that this behaviour ought not to be publicly acceptable?

[Sheila Fraser]

There is, and that is one area in which we have noted that they have actually made a lot of progress and have done much more active communication. I'm even told that they have things on YouTube to try to deal with younger people and new methods of communication.

I personally haven't seen it, but they have done quite an extensive communication strategy and have done a lot of work to try to encourage people and to make them realize the importance of paying their fair share.

[The Chair, Liberal, Shawn Murphy]

Mr. Desnoyers, you have two minutes.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Ms. Fraser, in your presentation, you say:

The Privy Council Office believes that our audit report on GIC appointments goes beyond the Auditor General's mandate. I am confident that our position is sound [...].

I too think your position is sound. When processes are put in place, they must be respected. There must be verifications to ensure that the process really is in place.

In point 2.34 of your report, you say that you sent out a questionnaire and received replies from various crown corporations:

[...] 26 of 41 Crown corporations suggested director candidates' names to the minister's office; 38 suggested overall competencies; and 32 communicated current gaps in competencies. Only 11 Crown corporations considered that their input was taken into account during the appointment process.

Doesn't the fact that the minister decides on all of the nominations skew the process? I find that aspect worrisome as well.

[Sheila Fraser]

Bear in mind that making nominations is the minister's prerogative. The minister may or may not take into account recommendations from corporations. I too find that somewhat worrisome. The crown corporations have gone to great lengths to develop the profiles for their boards and the skills required. I think that all of the crown corporations sent these profiles and skills to the Privy Council and were engaged in the process. It is important for the corporations to be engaged in this process. If they find that the recommendations are not being taken into account, I am under the impression that they will give up and no longer worry about profiles, making recommendations and everything else.

The government policy adopted in 2004 or 2005 was designed to hire executive recruitment advisors to help find candidates and define qualifications. Although we acknowledge that it is the minister's prerogative to make nominations, I think it is important to respect the process.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Desnoyers.

It's presently around 5:10 p.m. We have completed the first and second rounds. The chair is at the pleasure of the committee.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

You responded to my earlier question on the National Parole Board. The most recent nominations date back to 1994 and they were for a 10-year term. When these terms expired, most were renewed and nothing more was said about them. Nevertheless, there are still problems with nominations at the National Parole Board. Changes do not appear to have been made to the selection process.

My colleague raised the most important aspect: the process. When we were sitting in camera, I asked you if you were aware that the existing selection committee and the chair of the IRB had resigned. I did not think that you had examined the candidate selection process.

[Sheila Fraser]

We examined the candidate selection process for the period covered by our audit, in other words from 2006 to 2008. I believe that the chairman resigned prior to our audit.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

In camera, you also said that there was an expiry date for the list of candidates.

[Sheila Fraser]

Yes, it expires after two years.

[The Chair, Liberal, Shawn Murphy]

Merci beaucoup, madame Faille.

At this point in time I'm going to call for closing remarks from Ms. Fraser or Mr. Vaughan.

Ms. Fraser.

[Sheila Fraser]

Chair, I'd just like to thank the committee for their interest in our report. We look forward to future hearings on some of the chapters.

[The Chair, Liberal, Shawn Murphy]

Mr. Vaughan, do you have any final comments?