Public Accounts Committee on May 7th, 2014

[The Chair, NDP, David Christopherson]

I now declare this 25th meeting of the Standing Committee on Public Accounts in order.

Colleagues, we have the bells ringing and we've agreed that I'm going to mention a couple of small pieces of business. Then we'll move immediately to the presentation by the Auditor General, Mr. Ferguson. I'll then suspend the meeting and we'll go to the House. When we've concluded voting we will return here and begin our questioning in the usual rotation.

Is everybody in agreement?

[Some hon. members]

Agreed.

[Chair]

All right.

Colleagues, you'll recall that we were rescheduling chapter 8, and the choice next week was Monday or Wednesday. It ends up that Wednesday is the best day for all the parties. So on Wednesday we will be holding a public hearing on chapter 8, “Disaster Relief for Producers—Agriculture and Agri-Food Canada” of the Fall 2013 AG report.

Also, on Monday, May 12, we will do committee business. We have a number of things outstanding.

The last thing I'll mention is the invitation to the annual national conference of public accounts committees to held in St. John's, Newfoundland this year. The invitation is being sent around to you, and I've asked Joann to take a look at a draft budget and any other prep material and have it ready for our Monday business meeting, so we can make some decisions on what we want to do on that.

So if we're good to go, Mr. Ferguson, I'll ask you to read your presentation on your report. Then, as I say, we will suspend, return, and continue after that.

Sir, you now have the floor.

[Michael Ferguson, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you.

Mr. Chair, I am pleased to present my spring 2014 report, which was tabled in the House of Commons yesterday.

I am accompanied by assistant auditors general Jerome Berthelette and Wendy Loschiuk, and audit principal John Affleck.

This report touches on a number of different areas which illustrate how important it is for government to consider both the long- and short-term perspectives when planning programs. Serving immediate needs can move the emphasis away from long-term planning, which can impact results down the road.

In the first audit, we looked at how the Treasury Board of Canada Secretariat, the RCMP, National Defence and Finance Canada have carried out key responsibilities to manage the federal government's pension plans for public servants.

The federal government's net liability relating to these pension plans exceeds $150 billion. Although we found that the entities we audited have carried out their responsibilities under the law, no one is responsible for carrying out a regular and systematic assessment of whether Government of Canada pension plans are sustainable over the long term.

Pension plans are operating now in an environment where interest rates are low and plan members are living longer. It is therefore important that public sector pension plans be designed and managed in a way that considers not just present circumstances, but also protects the interests of current and future employees and taxpayers.

We also looked at how Correctional Service Canada planned and executed the expansion of its correctional facilities to accommodate offenders. The agency is adding over 2,700 cells to 37 facilities. It expects that when it completes this work, in 2015, overcrowding in federal prisons will largely be eased.

We found that Correctional Service met its immediate needs, but it did not consider the impact of expansions on supporting infrastructure. It also did not consider how to address regional pressures and the long-term needs of the offender population. Decisions about expansions were based on where land was available and where construction could be completed quickly. For example, we found that eight of twenty institutions that were initially identified for closure were instead expanded. The agency has committed to developing a long-term accommodation plan, by 2015, to guide modernization.

Let's turn our attention to the first nations policing program. This program was created in 1991 to address concerns about policing in first nations communities. The program is not working as intended, and many issues persist. For example, though intended to provide first nations communities with policing services, other than those that are the responsibility of the provinces, we found that the program is sometimes used to replace core services normally provided by the provinces. We also noted that in Ontario the program does not ensure that policing services on first nations reserves meet the standards that apply to policing services elsewhere in the province.

This report also presents our findings about the procurement process used to award the 2009 contract for the government's integrated relocation program. We found that a lack of upfront planning within Public Works and Government Services Canada, National Defence, the RCMP, and the Treasury Board of Canada Secretariat led to missed milestones. This affected decisions the organizations had to make and actions they took along the way. While officials took steps to remove some barriers to competition, these steps were not sufficient. As a result, the relocation services contract process did not facilitate access and encourage competition, and only one bid was received.

Given the complexity of the relocation program contract and its significance, this type of procurement requires considerable oversight and input from senior officials.

Public Works and Government Services Canada should work with its client organizations to manage the procurement of relocation services so that there is sufficient oversight and accountability.

Let's turn now to our audit of how Public Works and Government Services Canada monitors specific terms and conditions outlined in the contracts with a third party provider of building management services. We found that monitoring steps are adequately designed, but noted weaknesses in the way they are implemented.

For example, public works did not apply its quality monitoring program—a key contract monitoring step—to over 230 leased buildings, representing 8% of the total space managed under contracts. Such weaknesses reduced the department's assurance that the service provider complied with the contracts.

In our audit of aggressive tax planning, we found that the Canada Revenue Agency has an adequate program to detect, correct and deter non-compliance of certain tax schemes. However, the agency has to continue its work to improve the management of information to run the aggressive tax planning program and to measure its success.

In another audit that looked at how the Canadian Northern Economic Development Agency manages and delivers selected transfer payment programs, we found that the agency is not adequately monitoring the contributions it pays out. It does not collect enough information from recipients to know the extent to which they are complying with the requirements set out in their contribution agreements. As a result, the agency does not know the extent to which programs are achieving their intended objectives, nor whether the funding it provides is making a difference to economic development in the north.

When the agency was established in 2009, the government determined that its headquarters would be located in Iqaluit. However, the agency has not been able to fill some key positions in the north, and critical corporate functions continue to reside in the Ottawa liaison office. The agency is updating its human resources plan to guide future recruitment, but it does not have a plan to relocate corporate functions to Iqaluit.

Moving on to our audit of Statistics Canada, we found that the agency applied its framework to ensure the quality of its data products. As Canada's national statistical agency, Statistics Canada generates key information on the country's socio-economic conditions. The information is used by governments, researchers, academics, businesses and non-governmental organizations.

We found that Statistics Canada needs to better understand and address the needs of users outside the federal government, in particular the need for data on small geographic areas and subpopulations.

In 2013, our office performed special examinations of the Laurentian Pilotage Authority and the Canadian Museum of Civilization Corporation. Neither examination noted any significant deficiencies, though we did recommend some improvements to both organizations' practices. As in past years, our spring report includes the main points of the reports we presented to the boards of these Crown corporations.

As some of these audits show, government can become caught in a cycle reacting to pressures, whether to mitigate capacity concerns in prisons or meet program timelines. Though government should work to provide Canadians with programs and services in a timely fashion, planning should also look beyond the needs of the day. Better long-term planning is achievable in many of the areas we are reporting on today and would improve results for Canadians and make better use of taxpayer dollars.

Mr. Chair, that concludes my opening statement.

We are happy to answer any questions members may have.

Thank you.

[The Chair, NDP, David Christopherson]

Excellent. Thank you very much, Mr. Ferguson.

As agreed, colleagues, I will now suspend. If we could return immediately after the vote, we will begin our rotation of questions and comments.

We now stand suspended.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Chair, I would like to introduce a motion to extend the committee meeting until the next vote. That would allow us to honour Mr. Ferguson's presence.

[The Chair, NDP, David Christopherson]

We haven't started yet. Did you know that?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Yes.

[The Chair, NDP, David Christopherson]

Okay, go ahead, then.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Unanimous consent of the committee members is required to extend the committee meeting until the next vote, which would give us time to receive Mr. Ferguson with some dignity and ask him all of the relevant questions. The motion reads as follows:

That, in order to continue the questioning of the witnesses, the Committee continue to sit until 6:00 p.m.

Do we need unanimous consent, Mr. Chair?

[The Chair, NDP, David Christopherson]

In other words, you want us to go from 5:30 to 6:30 to make up for the time we lost.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Who would like to speak to the matter?

[The Chair, NDP, David Christopherson]

The difficulty is that anybody who has something scheduled for 5:30 is in trouble if we do this. That doesn't mean we can't do it, but that is the stumbling block when we do these kinds of things, as people plan their days.

It's informal. I haven't gavelled us back yet, so we can have a go at it.

John.

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Chair, I think out of respect for our witnesses, who were held hostage this afternoon by our vote, it would probably be appropriate that we first seek if they're prepared to stay, and then we can talk about whether or not we have any interest in going further.

[The Chair, NDP, David Christopherson]

Okay, I'm in your hands.

We don't normally do this. It's not an inappropriate request, but normally we don't, unless there are extremely extraordinary conditions. But I'm in your hands.

Are we ready to gavel the meeting back to order, then? We'll take it up as it comes.

[Some hon. members]

Agreed.

[The Chair, NDP, David Christopherson]

The 25th meeting of the Standing Committee on Public Accounts is now back in order.

We have heard from Mr. Ferguson, who has formally presented his report to us. It is now my intention to turn this to our regular rotation, unless there are any interventions prior to starting that.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Chair, I propose that the committee extend its work until 6:00 p.m., which will allow us to receive Mr. Ferguson with all the respect we owe him, to ask him all the questions and get all the answers he wishes to provide.

[The Chair, NDP, David Christopherson]

Fine.

Before we go any further, let's see if Mr. Ferguson and his staff are available.

Are you available, sir?

[Michael Ferguson]

Yes, certainly.

[The Chair, NDP, David Christopherson]

Okay, so there is a motion before us.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Mr. Chair, we just had a very slow vote, and we're here. Why don't we see where we get first as a committee, and we could always have these kinds of motions.

Monsieur Giguère could perhaps wait until after we've done our full round to see if more time is necessary.

[The Chair, NDP, David Christopherson]

Do you agree with that, Monsieur Giguère?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

In a way, that means that we are delaying the same discussion. If that is the sine qua non condition we need to obtain unanimous consent, then I agree.

[The Chair, NDP, David Christopherson]

Okay.

At the end of the round, or 5:30, whichever comes first, we'll see where we're at. Okay?

[Some hon. members]

Agreed

[The Chair, NDP, David Christopherson]

All right. Agreed.

We will begin. I have a speakers list, and kicking off today's discussion, Mr. Hayes.

You have the floor, sir.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Thank you, Mr. Chair.

Welcome, again.

I'm going to focus my questions on Correctional Service Canada, the penitentiary system. In paragraph 4.21 of your report, sir, you examined whether Correctional Service Canada has sufficient capacity to ensure safe and secure custody at each security level.

Did you audit safety statistics or conduct any review to determine the relationship between capacity and safety? Specifically, are you stating in any way that there is any relationship between double bunking and safety? Double bunking is mentioned a number of times in your report as well.

[Michael Ferguson]

The audit didn't specifically touch on that issue. However, we do say, in paragraph 19, that in 2009, Correctional Service Canada identified serious implications with double bunking, including increased levels of tension, aggression, and violence. It also identified increased safety and security concerns for staff and offenders. This was something that, in 2009, CSC identified was a risk that could be associated with double bunking.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

That's interesting, because there was a report on CBC in December 2013 that refuted that, indicating that prison violence was not linked to double bunking. But in the event that we do study this report more fully with officials, I guess we'll cross that path at that time.

Did you look at the types of facilities in terms of.... Let me give you an example: Yukon. That's what's referred to as a generation three facility that was built at a cost of $67 million and it was actually designed for double bunking. Many argue that double bunking is socially better than being in isolation.

Did you draw a relationship between the types of facilities? I think we understand that double bunking in a cell designed for one person might not be the best, but some facilities are designed specifically for double bunking.

[Michael Ferguson]

We looked at how Correctional Service Canada managed the expansion of its facilities, and they have policies about the level of double bunking that they consider to be acceptable. So we took that into account from the point of view of the system as a whole. But, again, the audit wasn't focusing on double bunking and its impact.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Your report states that in 2009 Correctional Service Canada received approval to spend $751 million over five years to expand existing institutions. They also received approval in principle to construct five new penitentiaries at a cost of $960 million.

Also, you note that in 2012 Correctional Service Canada recognized that its offender population had not grown as much as they had expected and they consequently returned $1.48 billion that was earmarked for construction, including funding for operations that had been set aside and for growth in the offender population that didn't occur.

As a matter of fact, in your report, Correctional Service Canada projected a growth from 14,200 in 2009 to 18,450 by March 2013. In fact, in March 2013 the population had increased only to 15,224, which is a dramatic shortage versus what had been projected.

Can you provide any insight as to how the officials underestimated this so much, or did officials provide an explanation to you as to why they underestimated the prison population so much?

[Michael Ferguson]

In terms of the specifics of how they did the calculation, that's something that Correctional Service Canada themselves would have to explain. However, we do indicate in paragraph 4.10 that they were estimating the large increase due to changes in sentencing legislation. They then determined that what they had expected to result from that hadn't occurred in terms of having an impact on their actual population. However, the details of the calculation would have to come from them.

[Bryan Hayes, Conservative, Sault Ste. Marie, ON]

Were any of your recommendations moving forward based on the projected population provided by Correctional Service Canada, which may not in fact materialize?

I ask because over the last four years, we're seeing an increase of 250 per year, and I believe I read in your report that there's a projected increase of 1,500 over the course of 2014-15.

Are you making recommendations based on that projected 1,500 population increase?

[Michael Ferguson]

Certainly, we noted that they had overestimated the numbers in that original time period, and then they readjusted their estimates to a different way of estimating. Yes, we are looking at the fact that they now have new projections going forward.

As for the types of issues that we have raised regarding their having a long-term accommodation plan, whether that target number is reached within three or four years or five or six years won't necessarily change the recommendation, which is fundamentally to have a good long-term accommodation plan that looks at that growth and what types of facilities would be needed.

[The Chair, NDP, David Christopherson]

Okay, your time has expired.

Thank you to you both and moving over to Mr. Allen.

You have the floor, sir.

[Malcolm Allen, NDP, Welland, ON]

Thank you, chair, and thank you to the Auditor General and his team for being with us today.

In two different reports you raised the issue of the availability of information in two different ways. Could you walk us through that? I think one was a cabinet confidentiality issue and the other issue was you just didn't get the information.

Sir, could you highlight for us exactly how that works itself through? You make a request, then what happens in those two particular cases?

[Michael Ferguson]

Certainly.

In general, we will set an audit objective. For example, in the chapter about aggressive tax planning the audit objective was to look at how the Department of Finance manages requests coming from the Canada Revenue Agency to make changes to legislation to deal with certain tax strategies.

We would have asked the Department of Finance for information about their process. They gave us an explanation of how the process works, but then they didn't give us any information that showed how they actually followed the process in the cases we were dealing with. So we would have explained to them exactly what we wanted and the type of evidence we were looking for. Then they would have gone through, looked at what they had available, and assessed it to determine whether it's cabinet confidence. In this case they determined it was cabinet confidence, which meant that we wouldn't get access to it. I think the other case was probably similar.

There is an agreement that says what type of information we do and do not have access to. Departments go through our requests, when we ask for something that is in specific types of documents, to determine whether it's in cabinet confidence documents. Once that decision is made, we obviously don't have access to the information.

[Malcolm Allen, NDP, Welland, ON]

But my understanding is that you have a protocol in place now, and thus you understand the parameters you're working inside. So when you're asking for information, you don't actually ask for cabinet documents, because you know that you're not going to get them.

Was this troubling for you and for your department? Did you agree with them wholeheartedly and say: “Okay, you're absolutely right; we're not entitled to them, we're not going to...”? Or is there a remedy that you're seeking to try to get hold of information that you didn't get?

[Michael Ferguson]

What they said was that the information we were asking for was contained in cabinet confidence documents. You're right: we don't ask them to please give us information that's in cabinet confidence documents; we ask for information that helps us understand whether they did the steps that they said they should do. At the end, they go through the process, and there's not much else we can do on that front.

In this particular case, I guess I did find it a little surprising that the information that might exist about any analysis or consideration that was put to these requests was all contained in documents that would be considered cabinet confidence. But we have started some conversations with the Privy Council Office on this, and I think there may be some areas in which our agreement and our protocol needs to be clarified. I don't think I need at this point to bring the issue forward beyond what we can work through ourselves with the civil servants; I think we're okay on that front for now. But if it seems to be a problem, certainly we would then consider bringing the issue back.

[Malcolm Allen, NDP, Welland, ON]

Time runs short today, so let me just jump to the issue of long-term planning.

I notice in two of the reports, one on prisons and the other on pensions.... Let me take us back to the front page of your opening comments today, at the beginning of the meeting, and quote back to you your words about public sector pension plans:

...no one is responsible for carrying out a regular and systematic assessment of whether government of Canada pension plans are sustainable over the long term.

You also raised the issue, of course, in I think chapter 4 on prisons when you talked about the issue of expanded facilities, of there being land inside a secure perimeter but there being no plan about where facilities were needed.

Is that fairly accurate, in your view, as to the lack of long-term planning in both of those particular instances?

[Michael Ferguson]

Certainly in both of those audits we raise the fact that there is work done, that short-term needs were satisfied, but that there needs to be longer-term planning in both of those areas. I think that issue of long-term planning is illustrated in both of those audits.

[The Chair, NDP, David Christopherson]

Thank you. Time has expired.

We go over to Mr. Aspin.

You have the floor, sir.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Thank you very much, Chair, and welcome, Mr. Ferguson. Thank you for appearing again.

The special examinations of crown corporations, chapter 9, is what I'm focusing on, and especially with respect to the Canadian Museum of Civilization Corporation. This report notes that the corporation “has put in place a corporate governance framework that meets the expectations of best practices”.

Can you tell us what some of these best practices are? Were any of these introduced since the last audit in 2006?

[Michael Ferguson]

I don't have the specifics of all of the details of the corporate governance at the museum. We do recognize that the corporation has put in place a framework that meets the expectation of best practices. However, we also said that the board is not fulfilling some of its roles and responsibilities and that there are some weaknesses related to the board's continuity.

Overall, we found that the corporate governance framework that does exist at the corporation does meet or is well-designed in terms of governance practices. However, there still are some places where the corporation needs to improve and can strengthen the implementation of that framework.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Thank you, sir.

In the consideration of both crown corporations, could you tell me whether the following is true? You said that the you “found no significant deficiencies in the Authority’s systems and practices”, in the case of the Laurentian Pilotage Authority, and similarly in the case of the Canadian Museum of Civilization Corporation.

[Michael Ferguson]

In both of these special examinations, our conclusion was that there were no significant deficiencies in their systems and practices. We describe, for example, that a significant deficiency would be reported when there is a major weakness in a corporation's key systems and practices that could prevent it from having a reasonable assurance that its assets were safeguarded and controlled, its resources were managed efficiently and economically, and its operations were carried out effectively.

When we're doing a special examination, we are looking for very specifically described types of weaknesses that could prevent the crown corporation from safeguarding its assets and having good practices in place to manage its business. In both of these cases we found there were no significant deficiencies. We did have some recommendations for improving some of their practices, but our overall conclusion was that there were no significant deficiencies.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Okay.

You've made some fairly positive recommendations here, particularly for the Canadian Museum of Civilization, in terms of strategic planning and updating their collection of development plans, and also the management's use of the collection information system.

Has that corporation agreed with your recommendations? Are they moving forward on implementing these specific improvements?

[Michael Ferguson]

In terms of both of these special examinations of the two crown corporations, each of them has said that they agree with our recommendations and that they will move forward on implementing them.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Okay.

Chair, if I have a few minutes—

[The Chair, NDP, David Christopherson]

No, you have 30 seconds.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Thirty seconds? Good.

I'm going to do this a little backwards. I'd like to compliment you, sir, on your French. I'm amazed at how you've learned the language. As someone who has tried to acquire the language all my life, I'm very envious of your talent.

[Michael Ferguson]

I appreciate that. I still have a lot of work to do, though.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Thank you, Chair.

[The Chair, NDP, David Christopherson]

You're very welcome.

Moving on, Monsieur Giguère, you have the floor, sir.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you very much, Mr. Chair.

I would like to welcome Mr. Ferguson and his entire team. You do extremely important work by pointing out problems with administration, planning and mismanagement in the various departments and in the government while suggesting solutions that need to be made.

Like many Canadians, the people I represent pay their taxes, and it is important that the money be spent intelligently and not wastefully.

In the nine chapters of your report, you raise major problems with management and administration within this government. There is one chapter that seems quite troubling.

The problem comes up in chapter 2, which deals with the process for the procurement of relocation services. To jog your memory, these services are used to relocate employees, including members of the Canadian Forces, at a cost that is as reasonable as possible for the government, which spends approximately $300 million a year on this program.

What's troubling is that, in 2006, you presented a report on this problem, and you concluded that the contracts had not been awarded in a fair and equal manner. The Standing Committee on Public Accounts at the time supported your conclusions. The current government accepted your recommendations that contracts be awarded in the context of a fair, equal, competitive and, of course, economical process. The purpose was to save money.

You are back now in 2014 with another report on the same program being managed by the same department. Once again, your conclusions are that the measures taken to encourage competitiveness in awarding contracts were insufficient. In other words, there is still only one supplier. In eight years, this major problem has not yet been fixed.

For the benefit of taxpayers who pay their taxes, how do you explain that despite all of your past recommendations, the governments—be they Liberal or Conservative—have dropped the ball and that there is still no competitiveness in this area?

This time, we would like to have something with a little more punch to know how the government will finally fix the problem, because eight years to fix a problem is a long time.

[Michael Ferguson]

We have made recommendations in this report.

I think one of the reasons we certainly wanted to get this audit completed was so, if we did identify any weaknesses that existed in the process, that could help to inform the process for the next contract in this area.

Certainly, if we compare the process that was used in 2004 to the process used for the 2009 contract, we see the processes were different, and I would say that the process to award the 2009 contract was better than the process for the 2004 contract.

We did find that the departments got behind schedule, and getting behind schedule meant it had to shorten some timeframes. It took some decisions—for example, issuing only one contract and not dividing it up into three contracts—and all of those decisions led to there being only one bidder that bidder being the incumbent service provider at that time.

I think the other thing that was concerning for us was that—even after it became evident that there would only be one bidder, and Public Works decided to apply its processes to examine the cost, to examine the price that was bid, and got some information that indicated there might be some cost components that shouldn't be allowed—they stopped that work and didn't adjust the pricing in the contract.

We saw the decision points along the way; we understood that they made those decisions, made them within the framework. Those decisions then led to there being only one bidder. But I think the concern for us was that, even after it led to one bidder, they didn't apply the processes they had available to them to examine the price that was bid in a one-bidder situation.

[The Chair, NDP, David Christopherson]

I'm sorry, but the time has expired.

Moving on, Mr. Woodworth, you have the floor, sir.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you very much, Mr. Chair.

Welcome to Mr. Ferguson, as well as Mr. Berthelette, Mr. Affleck and Ms. Loschiuk.

Mr. Ferguson, I, too, would like to congratulate you on your French. You speak it very well. In fact, you speak it better than I do. So I will speak in English.

I didn't quite say that, but it's good enough. Clearly, my French is not so good.

I'm going to ask you about chapter 8 and to begin with the observations and recommendations starting at paragraph 8.10. I'm going to ask you some questions about the quality assurance framework and quality guidelines.

First of all, I understand that those do include good measures that ensure the accuracy of the data that Statistics Canada collects. Is that correct?

[Michael Ferguson]

Statistics Canada does have a quality assurance framework that includes six elements, as we define in paragraph 10: accuracy, timeliness, accessibility, coherence, relevance, and interpretability.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

My question was if the measures that the framework includes to ensure accuracy are reliable measures. Second, I understand that they have also been regularly employed by Statistics Canada to ensure accuracy.

[Michael Ferguson]

Yes, the quality assurance framework includes these six key elements, which are important elements of quality, and they do apply that framework to the products that they produce. We find that Statistics Canada is applying its quality framework to what it is releasing.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Good, and just to be completely clear, in addition to accuracy, that quality framework also results in Statistics Canada meeting satisfactory timelines for its data collection and release. Is that correct?

[Michael Ferguson]

Timeliness is the second of their six elements of quality, yes.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Are they meeting that?

[Michael Ferguson]

They were meeting it. What they do is to say “This is the date we are going to release something”, and we only found one case where they didn't hit that projected date. It was only missed by a four-week period.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Very good. I understand that another quality in those guidelines is to ensure that data is accessible and that the guidelines define what's necessary to ensure that the data is accessible, and that Statistics Canada is also meeting those requirements. Is that correct?

[Michael Ferguson]

We did say that Statistics Canada has made data from the selected data products accessible to users. We did also point out, though, that some of their users have said things like “The website is hard to navigate”. So there are some places for improvement.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Understood.

In fact, the Internet dissemination of data is a new initiative that Statistics Canada is proposing as an improvement in its accessibility. Is that correct?

[Michael Ferguson]

Certainly they did indicate they were planning on making some further improvements to make the products more accessible.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Also, the quality guidelines require Statistics Canada to assess and ensure the coherence of its product, that is, to bring them together in a framework with consistency, and Statistics Canada is satisfactorily doing that, correct?

[Michael Ferguson]

Again, we do say that they have assessed the coherence of the selected data product. For example, they routinely compare data from multiple sources and apply methods to ensure the coherence of the data. We also pointed out that because they had concerns about comparability of certain information related to the national household survey, they cautioned their users about that. They make sure their users understand the coherence of the data.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Very good.

I do want to move on then to the national household survey and just clarify a few points about that.

I understand that the national household survey resulted in data but that there was data unavailable for 3% of the population. Is that correct?

[Michael Ferguson]

That's correct.

[The Chair, NDP, David Christopherson]

Sorry, but we're now out of time, sir.

Moving on, Madame Jones, you now have the floor, ma'am.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you.

Actually, I'm going to pick up exactly where my colleague left off, on chapter 8, paragraph 8.52. You did highlight that, due to changes in census collection from mandatory to voluntary, the response rate had decreased from 94% to 69%, which would be a drop of about 25%.

You also pointed out that it had caused data to be more unreliable and, as a result of quality issues with the data collected, that 25% of geographic areas do not have reliable national household survey data available for use.

So in my opinion, when I read this report, it clearly states to me that there were flaws in moving from a mandatory data collection for vital information to a voluntary system. I'd like to ask why you would not have recommended that we go back to a mandatory data collection system, because to me it seems that would be the simple answer to fixing a lot of these problems that were outlined in your report.

[Michael Ferguson]

We do not comment on government policy, so what we looked at here was that there was a policy. Statistics Canada had to implement that policy. We looked at how it managed that. At the end of the process, there was data about 3% of the population that it was not able to release, compared to 1% under the census approach.

Its users have been asking for data, so we said it needs to better understand what its users are asking for and try to determine how it can fill that gap.

So we're not going to recommend any particular policy approach to filling those types of weaknesses that we've identified. It's up to it, the department or the agency, to determine what types of policy tools to recommend to help it deal with those problems, if any policy tools are required.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you.

It certainly establishes that there is some room to make some improvement and there are definitely weaknesses.

My other question again comes from chapter 8. It deals directly with paragraph 8.48. It deals with the labour market data. You indicated in your report that there was a panel report from 2009 that highlighted the issues with better local data on job vacancies by occupation and location. You also noted that the government had still not fully addressed a shortfall in the five years since your report was made public. I guess because of that you also went on to say that it's still not possible to determine where job vacancies are located in a province or territory.

I guess my question is this. What impact do you think this would have on the government's labour market opinion for specific regions if they don't have local job data to start with in the first place? We're dealing with an issue in the country right now with regard to temporary foreign workers, and it's all coming back to data and what labour market information we would have available to us to be able to make the best decisions.

I guess I'm looking at what you've indicated in this report, and very glaringly it's telling me that we have a huge gap here. I guess I'd like to know how it impacts on other programs that we're currently funding inside the federal government.

[Michael Ferguson]

What we did identify was that there was a panel report in 2009 that noted the need for local data on job vacancies. In 2011 Statistics Canada did begin to produce—it added two questions to its survey on employment payrolls and hours, to try to collect some data related to job vacancies, but it still wasn't enough for it to produce information at sort of a more local level about where job vacancies are located.

So again, it's something that users of Statistics Canada have been asking for, and what we have recommended is that it needs to increase the amount of consultation it has with its users and determine if there are, I guess, feasible ways for it to fill the needs, and one of those needs would be information about local job vacancies.

[Yvonne Jones, Liberal, Labrador, NL]

If I could move very quickly—

[The Chair, NDP, David Christopherson]

Please move very quickly, ma'am.

[Yvonne Jones, Liberal, Labrador, NL]

And it's already been raised. It has to do with comments that were made in chapter 1 and chapter 3 with regard to not being able to access the information that you were looking for. It's quite obvious that because you did not have the information, you were not able to make appropriate conclusions with regard to those particular sections.

They say this is cabinet-protected because of cabinet privacy issues, or whatever the case may be. Is there a way around that for your office? You have a huge responsibility to Canadians when you look at how moneys are being spent inside the government. You need to be able to do appropriate audits and make appropriate recommendations as to whether it's been done properly. Without information, however, that's very difficult to do.

Is there a way to obtain information that could be deemed cabinet secrecy by departments but not necessarily deemed cabinet secrecy, through another avenue or forum? Here I guess I would be referring to the court system.

[Michael Ferguson]

Certainly in this particular instance I don't feel that we need to resort to any outside source at this point. I think that we will again explore the issue and try to resolve the issue at the bureaucratic level before we resort to other avenues for resolving the issue.

[The Chair, NDP, David Christopherson]

Good. The time has expired. Thank you both very much.

Over to Mr. Albas, you have the floor, sir.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair.

I just want to thank the Auditor General for being here with your staff.

In chapter 3, you've concluded overall that the Canada Revenue Agency's aggressive tax planning program has tools to detect, correct, and deter non-compliance. Is that correct?

[Michael Ferguson]

That's correct.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

You've also concluded that the Canada Revenue Agency has established a training plan for aggressive tax planning auditors and has put in place performance measures to evaluate the aggressive tax planning program results. Is that also correct?

[Michael Ferguson]

We did in terms of the training. However, we said they needed to do a better job of making sure they know whether the auditors are following all of the training. In terms of the measures we identified, they have had some measures. Of course, it's difficult to measure success in something where you are trying to deter behaviour, but we feel that they could improve on some of their performance measures.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

So on the subject of detection, in your report you've noted that the Canada Revenue Agency has not fully evaluated whether it's able to detect high risk large business files, as you said. You've actually recommended that in order for the agency to be assured that its aggressive tax planning risk assessment tool properly identifies high risk files, it should complete testing what's known as the national risk assessment model and its effectiveness. Can you please inform us of what the agency has said in response to this recommendation?

[Michael Ferguson]

The agency has agreed with the recommendation. They say that they are committed to testing the effectiveness of the risk assessment tool. They have agreed that it is something they need to back-test and make sure that it is effective.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

To confirm, the Canada Revenue Agency has agreed to your recommendation on the national risk assessment model and has agreed to have it evaluated in this fiscal year. Is that correct?

[Michael Ferguson]

It says that the ongoing evaluation will be accomplished through the built-in feedback provided as part of the automation project. So the project is to be completed in 2014-15, and we would expect that this process would be built into that model.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Now there's been some discussion and you've raised the fact that you were unable to conclude whether the Department of Finance had followed its processes to provide timely analysis of legislative issues regarding aggressive tax planning. Yet in your concluding paragraph 3.61 you say quite clearly:

...it is apparent that most of the Agency’s priority requests from 2011 to 2013 have been addressed in recent budgets.

Is that correct?

[Michael Ferguson]

That's correct in terms of the particular items that we were looking at. We did see that most of them were dealt with in budgets. However, what we were looking for was to determine how the Department of Finance actually processed the requests. While we saw what was going into the system and the fact that there were budget changes, we weren't able to look at the actual steps that Finance took to see whether they did comply with all of their normal steps and that they were taken in a timely fashion.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

So in paragraph 3.58 it says that you were provided with a description of the process used for legislative changes, a template used in budget briefings and information about budget measures announced by the department and some analysis.

So they were compliant in giving you what they could, or at least what they felt they could that did not meet the cabinet confidentiality. Is that correct?

[Michael Ferguson]

It is my understanding that they assessed what we were asking for and gave us things like the description of the process that they felt they could give us, and then determined that the rest of the information constituted a cabinet confidence.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Okay.

I also note that there is a very helpful chart—at least helpful for people like me, exhibit 3.1—which points out a number of things: offshore insurance, RRSP strips, stock dividend value shift, and tech wrecks. Now rather than going into all those, I just wanted to point out that you also had a subsequent event, described in paragraph 3.62, after your audit was concluded. There was some further legislative action showing that the government does obviously pay very close attention to what Canada Revenue Agency feels are legislative priorities, and you obviously took those seriously.

[Michael Ferguson]

Well, they did propose changes in the federal budget of February 2014 to address the offshore insurance plan issue. So again, that was another situation where we did see eventual legislative changes to deal with issues that the Canada Revenue Agency has brought forward.

[The Chair, NDP, David Christopherson]

Sorry, Dan, but your time has gone by.

Moving along, Mr. Allen, you have the floor again, sir.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Chair.

Going back to chapter 8, specifically to 8.50, where you talk about data on job vacancies from surveys that you term as having limitations.

In the paragraph itself, you said, “For example, reported job vacancies in Alberta...”. I know my colleagues who live in Alberta always tell us about the great number of jobs that are out there and no doubt that is true. My son actually works there. So there's no question that there are jobs in Alberta.

The dilemma for folks in Welland, for instance, who might be thinking of going there.... According to what I read here, it says that if you look at this particular survey, you wouldn't know where the job vacancy was in Alberta. It could be in Medicine Hat, Fort McMurray, or Grande Prairie.

I used to live in Edmonton, which is at one end of the province compared to the other end of the province, with one in the middle.

You also go on to the end and talk about limited classification types of work and, etc. So really at the end of the day you could pick the right place, such as Grande Prairie, by accident because you thought, “Well, it doesn't really tell me where to go, but I'll go to Grande Prairie, get to the employer”, and then you find out that, 'Well, sorry, you're an electrician, Mr. Allen, and we wanted a pipe fitter.” So I would have travelled to Alberta for a job that doesn't exist because the survey couldn't help me get there; it simply told me there were jobs available. Am I reading that incorrectly?

I realize I've paraphrased some of this and that it's somewhat specific/non-specific, if you will, but is that really what the survey told me, that there are jobs in Alberta but it just can't tell you where the jobs are and what they actually are? Is that really what the survey tells me?

[Michael Ferguson]

I think the user of this type of data would be more of a researcher or analyst trying to identify where there might be vacancies, perhaps at the municipal level and that sort of thing. But certainly we did identify that the information is really still limited to job vacancies at the national, provincial, and territorial level, and not at the local level. So anybody who is trying to do research about where there might be job vacancies from a policy point of view or understanding the economics of a particular situation wouldn't know where those job vacancies existed.

[Malcolm Allen, NDP, Welland, ON]

I appreciate the clarification. It's kind of at a macro policy level. But ultimately if the government is actually using that as a policy tool to encourage people to go somewhere, they really can't tell you where to go except to go to Alberta. I'm not asking you to comment on that. That's a conjecture that I'm making, but it's what I think I just heard, that I wouldn't necessarily use this stuff personally to go look for a job. But if the policy folks are writing and saying, “By the way, there are jobs available in Alberta”, that's about all they could tell me.

Let me go to paragraphs 8.53 and 8.52, because I was interested in them, especially where they talk about the national household survey data and about 25% of the census subdivisions not being any good due to quality concerns. The additional piece is that the data for an additional 686 census subdivisions, or 15%, was not released for confidentiality reasons. Is that a cumulative total, 25% plus 15%? Or is there a subset somewhere inside that 15%?

[Michael Ferguson]

It's an accumulative total. The 686 additional census subdivisions, where the information wasn't released for confidentiality reasons, were mostly places where there would be a very small population. That's why there is the confidentiality concern. In terms of census divisions, it is additive: 25% and 15%. However, in terms of the impact on the total 3% of the population for which information was not released, it wouldn't have moved that 3% very much at all because these are very sparsely populated areas.

[Malcolm Allen, NDP, Welland, ON]

I appreciate that statistically that wouldn't have moved the number of three, which is three times higher than when we used to have the long form census. That is a pretty extreme magnitude, quite frankly. We're not talking doubling or a half, but we're talking about three times as many. So, it was 1% in 2006 according to you when we had a long form census. It's 3%, which is three times the magnitude. That's a pretty high number. But, clearly for small subdivisions, and I used to live in a small community, data was important to us even if we were a small community when we were trying to make decisions. So even for a reeve in a small place, they still need data.

However, let me draw us back to the comment that's made in paragraph 8.52 which is that when we had the old census, 94% in 2006 were returned, versus the new one at only 69%. Not only do we get less data, it seems, if I'm reading correctly from the new one, but we also get three times more unusable data, the 3% of the population. Is that a fair and accurate description of those paragraphs?

[Michael Ferguson]

Well, I think I need to clarify that. Yes, the response rate went from 94% to 69%. Statistics Canada anticipated that there would be a decrease in the response rate. So they did increased the number of people they actually surveyed. So the 94% response rate was tied to three million surveys and the 69% rate was tied to 4.5 million surveys. So, at the end of the day, the number of responses actually received was pretty similar, because when you apply the response rate to the number of surveys sent out, it was similar. But what happened was that the response rate was not sufficient in certain areas and, therefore, they didn't have enough information on about 3% of the population. So the issue wasn't so much the number of responses they got back, but from where those responses came.

[The Chair, NDP, David Christopherson]

I'm sorry, but your time has expired. Thank you.

Over to Mr. Woodworth: pick up where you left off last time, sir.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you, Mr. Chair.

It's quite appropriate, because I'll also pick up where Mr. Allen just left off, because he's touching on exactly what I was trying to get at.

First of all, the 3% figure for the population with unavailable data is an increase from 2006, when it was approximately 1%. Correct?

[Michael Ferguson]

That's right.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

So even in 2006 there must have been some deficiency in the small area and sub-population data, correct?

[Michael Ferguson]

It was related to 1% of the population at that time.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Again, just to be very clear—you just stated this, but I want to be very clear about it—in 2011 there were responses from about 3 million people across the country or about 200,000 more responses than in 2006. Correct?

[Michael Ferguson]

I think if you do the math, comparing 69% of 4.5 million to 94% of 3 million, you get a number that would indicate that there were roughly 200,000 more in 2011.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

All right.

So those percentages are different because, in fact, the surveys were received by 50% more households in 2011 than in 2006—in other words, by 4.5 million households rather than only 3 million households in 2006. Correct?

[Michael Ferguson]

That's right. Again, that was because they anticipated that there would be a change in response rate and knew that they had to increase the number of surveys they were to send out.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

You have not anywhere assessed the cost of providing that small area and subpopulation data, correct?

[Michael Ferguson]

That's correct. I think the only indication of cost in here other than the overall cost of producing data was that Statistics Canada did receive additional money to manage the change from the census to the national household survey.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

In terms of bridging that 3% gap, there's nothing in your report that would tell us how much it would cost to resource that.

[Michael Ferguson]

That's correct.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

On the other side of the cost-benefit equation, you also have not assessed what might be the economic value of that 3% subpopulation in small area data to users. Is that correct?

[Michael Ferguson]

That's correct. No, we haven't.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

In fact your recommendations suggest consulting with the users, and that might be one area where Statistics Canada should consult with the users just to determine the value to them of that data. Correct?

[Michael Ferguson]

Absolutely. It would be to determine what they are looking for, what the value of that is, and then they would need to determine the cost of collecting the data.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

As I understand it, and I don't know if this came from your report, or maybe it was the department's response, in November 2013, Statistics Canada did in fact initiate a more extensive dialogue with regional and local governments and agencies somewhat along this line. Am I reading that correctly?

[Michael Ferguson]

That is what the agency has said in their response, so I can't speak to exactly what they have done.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

But if they do that, that would be an appropriate ongoing further course of action in your view, would it not?

[Michael Ferguson]

Again, we would have to assess it. We haven't audited it, but what we would be looking for is whether they have something that, as you say, would be an ongoing approach to understand the needs of their users across the broad range of those users.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

And you would not rule out the possibility that there are alternative sources of data for small area and subpopulations than the national household survey, correct?

[Michael Ferguson]

Certainly that's something Statistics Canada would need to explore with their users, given what their users are asking for. Are there other ways to get the information on a cost-effective basis that would fulfill what the users are asking for?

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

If this data was for a small area or a specific subpopulation, would it be within policy even to consider generating it and providing it on a cost-recovery basis to the users?

[Michael Ferguson]

I guess I can't speak specifically to all of the cost-recovery rules, but if it's not within the rules now, it would be certainly something they could explore.

[The Chair, NDP, David Christopherson]

Sorry, your time has expired, sir. Thank you both.

We will go over to Madam Jones. You have the floor, ma'am.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you.

I have some questions with regard to chapter 6 and the CanNor Agency. When I was reading through the report, I found it very unusual that there were several sections in which you indicated they had not followed the proper.... I don't know if it was the proper protocols, but they certainly didn't have adequate tracking, and they were not looking at some of the paperwork in detail that was coming in. Some of the final reports were late, and supporting documentation was inadequate to match the payments that were going out. There were a number of things.

I'm looking at this and seeing some of these payouts of $600,000 and others of $200,000, and one for a truck for $31,000 for which there was no receipt. All of this to me shows a lot of evidence of an agency or a corporation of the federal government responsible to taxpayers in this country before giving out money and signing off on those kinds of cheques failing to do its job appropriately.

What recommendations are being made to the government for it to conform to better standards, better regulations, and more accountability before allowing these kinds of Canadian taxpayers' dollars to be paid out to charitable and business corporations without proper documentation?

[Michael Ferguson]

In this particular audit, we were concerned with the fact that we found many cases where there wasn't adequate documentation, so that Treasury Board policies about transfer payment programs were not followed in all cases.

In terms of the recommendations that have been made, in this particular audit we have made, I believe, 12 recommendations contained at the back of the audit. I could read through all of those for the record if you want, but other than that, there are a number of recommendations here that talk about ways for the Canadian Northern Economic Development Agency to make sure they're using good practices, are complying with Treasury Board policy, and are measuring whether what they are doing is having an impact on economic development in the north.

[Yvonne Jones, Liberal, Labrador, NL]

This is where I see the irony, because one of the other mandates of CanNor Agency was to ensure that they would have a base of operations out of Iqaluit, that they would have the majority of their people there. They would be working out of the northern region, serving northern clients, and so on. Yet, they've said they have not been able to fulfill their mandate to the northern region because they cannot attract properly qualified people to do the jobs. Therefore, they've had to continue to station positions in Ottawa, as opposed to moving them out to the communities where the program should be applied.

When you made your recommendations to the agency, the responses all came back in terms of their recognizing they had a problem. They agreed with your recommendations, and they would conduct training for their program officers to ensure that there was more accountability or proper documentation being followed. To me, there's a lot of irony in that: you can't fill the jobs in the territories because you don't have people trained, but the reason the job is not getting done properly here is because people aren't trained.

I don't know, but the correlation does not jibe for me. This is obviously an agency where I'm seeing some major issues and problems that have not been dealt with, and the excuses they're providing are not jibing with the reality of what you're reporting.

[Michael Ferguson]

I think we did identify a number of cases related to the three transfer payment programs we were looking at, where the agency was not complying with Treasury Board policy around transfer payments, not adequately managing many of the payments they had made, and not tracking information about whether they have had success.

Also, despite the fact that the intention was to have the headquarters in Iqaluit, in terms at least of key corporate functions, whether it's a president, vice-president, policy planning, communications, or senior advisor for Inuit community relations, those positions were still located in Ottawa.

There are many different areas, and as I said, in this particular audit we made 12 recommendations that related either to the practices for handling these types of transfer payments, or the concerns related to where the staff were located. We made 12 recommendations to the agency.

[The Chair, NDP, David Christopherson]

Thank you. The time has expired. Sorry. Yes, it goes quick.

Colleagues, we had agreed on an order of the day that either at the end of our normal rotation or 5:30, we would deal with the issue of Monsieur Giguère's motion. There are a couple of minutes left before 5:30. This would seem to me to be an appropriate time to deal with this. I would hope that we don't need a lot of debate, maybe one or two, so that de facto we don't eat up the time debating whether we should eat up the time. However, I am in your hands.

I look to Monsieur Giguère. You wish to place your motion, sir?

Unanimous consent at the beginning would have agreed on a formal motion; a clear majority, 50% plus one, will decide the issue.

So, there's a motion duly before us. Does anyone feel the need to speak?

I see Mr. Woodworth's hand first, and then Mr. Albas.

[Stephen Woodworth, Conservative, Kitchener Centre, ON]

Thank you.

Just very quickly, I wanted to congratulate Mr. Giguère on his chutzpah in proposing this motion after he, along with his colleagues, wasted close to a half hour in the House, time that we could have used in this committee.

[The Chair, NDP, David Christopherson]

Thank you.

Over to Mr. Albas.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair.

We certainly got a lot out of today's discussions. Obviously, we will be able to ask the Auditor General to come back with the officials at some point on certain issues yet to be determined.

I have been informed by certain members that they do have other commitments, so we are unable to support it at this time. However, we are happy that most members—well, not every member—got a chance to speak.

We'll take our lumps. I appreciate Mr. Woodworth's comments, but we all don't get what we want all the time.

Thank you.

[The Chair, NDP, David Christopherson]

Thank you.

Is there anybody else on the motion?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I will be brief, Mr. Chair.

It is regrettable that the members of the government party are afraid of the questions and answers that we could have asked, but we are used to that unfortunate habit and we will accept it.

Thank you, Mr. Chair.

[The Chair, NDP, David Christopherson]

You're welcome.

Therefore, there being no further debate, let's make a decision on the motion.

(Motion negatived)

With that, I will thank Mr. Ferguson and his staff.

Again, we appreciate the work that you do. You and your office are held in high esteem. Every time you come here, you reinforce why you deserve that.

Thank you so much for being here today.

[Michael Ferguson]

Thank you.

[The Chair, NDP, David Christopherson]

Colleagues, we now stand adjourned.