Public Accounts Committee on Dec. 4th, 2014

[The Chair, NDP, David Christopherson]

Colleagues, I now declare meeting 42 of the Standing Committee on Public Accounts in order.

I have a couple of minor business matters before we begin.

At 4:30 it will be necessary for me to leave the chair; something else has come up. Given the fact that the vice-chair is the person who selected this chapter it would tie the hands of Ms. Jones, so I bypassed her in filling in that last hour. I hope that's okay. I assumed she'd rather be there asking questions. So I've asked Mr. Hayes, who although not a vice-chair is a veteran of the committee, if he would fill in for that last hour, and he's agreed. I hope the committee finds that acceptable.

As you know, we're here for chapter 6, transfer payments programs—CanNor, of the spring 2014 report of the Auditor General of Canada.

Before we turn our minds to that, I want to take one moment on behalf of the committee to recognize publicly the fact that Jocelyne Therrien is leaving in January. She of course is the principal of parliamentary liaison at the Office of the Auditor General. We know her as the person who makes the body of the work of the Auditor General actually work.

Jocelyne, in this whole process, you're one of those folks who don't get a lot of attention. Not everybody outside of those of us who are here every day see the work you do, but you've made an outstanding contribution. I want to thank you so much on behalf of all the committees that have had the honour to work with you. May I say how lucky I think the Auditors General have been to have had you in that role. Thank you so much for your service to Canada, to the business of public accounts, and to the work of the Auditor General. We wish you the very long and happy retirement you so richly deserve. All the best.

[Some voices]

Hear, hear!

[The Chair, NDP, David Christopherson]

To begin her time in the salt mines, we welcome Michelle Salvail. Welcome aboard; you're next. We'll see you in the new year.

That exhausts my business prior to the hearing at hand. Unless there are any other interventions I will move us immediately to the matter at hand.

We have of course our Auditor General, Michael Ferguson. We also have the president of the Canadian Northern Economic Development Agency, Janet King.

I will ask each of you as I give you the floor to introduce your delegation and give us any opening remarks you may have.

Without further ado, Mr. Auditor General, you now have the floor, sir.

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

Thank you.

Mr. Chair, thank you for this opportunity to discuss chapter 6, entitled “Transfer Payment Programs—Canadian Northern Economic Development Agency”, from our 2014 spring report. Joining me at the table is Glenn Wheeler, principal, who was responsible for the audit.

The Canadian Northern Economic Development Agency was created in 2009. It is Canada's first stand-alone entity dedicated to promoting economic development in Canada's three territories.

We examined whether the agency manages selected economic development transfer payment programs in accordance with key requirements of the Policy on Transfer Payments. We also examined whether the agency has established the organization and aligned its resources to carry out its overall mandate.

Our examination focused on three programs: the targeted investment program, the community economic development program, and the northern adult basic education program. Through contribution agreements with recipients, the agency provides funding for projects that are aligned with the objectives of these programs. As of March 31, 2013, the agency had signed 345 contribution agreements with recipients under these three programs, allocating approximately $100 million to various economic development projects.

We concluded that the agency was implementing a management framework for transfer payment programs and that its assessment of project eligibility was adequate for two of the three programs. However, its administration of agreements was weak. For example, we found that it took, on average, over nine months after an application was received for a contribution agreement to be signed. As a result, some of these agreements were signed late in the fiscal year they covered, and some recipients had only a short period of time to spend funds. Of the 42 agreements we examined, 23 were signed in the last quarter of the year.

We also noted that the agency was not adequately monitoring the contributions it paid out. It was not collecting enough information from recipients to know whether they were complying with the requirements set out in their contribution agreements.

Furthermore, in the 42 agreements we examined, we found that the agency had not received all required reports. For example, about 15% of the reports due for the 2010-11 and 2011-12 fiscal years had not been received. Of those received, about 80% were late, most by several months. The project file showed little evidence that the agency contacted recipients to obtain reports or to do other monitoring such as phone calls or site visits.

As a result, the agency did not know whether the economic development programs were achieving their intended objectives, or whether the funding it provided was making a difference to economic development in the north.

When the agency was established in 2009, the government determined that, as part of its strategy, the headquarters would be located in Iqaluit. However, at the time of our audit, the agency had not been able to fill some key positions in the north, and critical corporate functions continued to reside in the Ottawa liaison office. The agency was updating its human resources plan to guide future recruitment, but it did not have a plan to relocate corporate functions to Iqaluit.

The agency has agreed with our recommendations, and it has prepared an action plan to address each of our recommendations. The committee may wish to contact the agency for its schedule and expected outcomes.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.

[The Chair, NDP, David Christopherson]

That's very good, thank you.

Now we'll go over to Madam King.

May I note, before I give you the floor, that you did get the all-important action plan in to us in a very timely fashion? We like to do the carrot-and-stick approach. We like to drop that stick on the head of folks who don't get the action plan in here in a timely fashion and give a compliment to those who do. We do give you that, and we thank you for the action plan.

With that, madam, you now have the floor.

[Janet King, President, Canadian Northern Economic Development Agency]

Thank you, Mr. Chair.

I'm Janet King. I'm pleased to be here today. I've been the president of the Canadian Northern Economic Development Agency, or CanNor, since July this past summer.

With me today is Mr. Mitch Bloom, the agency's vice-president; Mr. Yves Robineau, our chief financial officer; and Mr. Michael Bloor, who is director of operations in Yukon and has been acting director general of operations for the past seven months.

I am pleased to have the opportunity to speak to the committee about the agency and our mandate to advance economic development in Canada's three territories and our management action plan in response to the Auditor General's spring 2014 report.

To begin, I want to thank the Auditor General for his work and note that we accepted all of the recommendations in chapter 6 of his spring 2014 report regarding CanNor's transfer payments program.

Working with partners and stakeholders, CanNor helps develop a diversified, sustainable and dynamic economy across the north. We do this through our contribution programs, the Northern Project Management Office and by conducting policy and research.

Since its creation five years ago, the agency has taken steps to ensure its programs are operated efficiently and effectively, and we are continuously looking for opportunities to improve. The audit noted a need to improve CanNor's business processes, to implement performance measurement strategies for its programs, and to fully establish its headquarters in Iqaluit.

In response to the audit and to improve the administration of the agency, we have posted detailed information and application forms for our two main contribution programs, the northern aboriginal economic opportunities program, NAEOP, and the strategic investments in northern economic development program, our flagship SINED program. We've also developed new program guidelines and project assessment forms, as well as service standards, for both of these programs.

To aid in the monitoring and reporting on projects, CanNor has developed a correspondence and project monitoring tool. In addition, we've developed a quality assurance tool to reduce inconsistencies in funding agreements and compliance with CanNor's performance measurement strategy.

We've also developed an economic development officer tool kit to better inform our officers and better manage contribution agreements. Between March and May 2014, we conducted comprehensive regional training sessions with all of our economic development officers across the agency and will continue holding these training sessions regularly.

This past July, we completed a risk assessment tool for both SINED and NAEOP. In August we completed the development of a financial control process, and implementation is well under way. At the same time, CanNor completed an internal policy on monitoring of grants and contributions. Finally, this summer, the agency updated its human resources plan and completed both an Inuit employment plan and a strategic staffing plan.

Our management action plan, as tabled to the committee, provides the details and timing of all of these activities.

CanNor is committed to full accountability and excellence in the administration of our services and programs. For instance, CanNor recently redid its suite of four aboriginal economic development programs into a single program that is now called the northern aboriginal economic opportunities program. It was launched on April 1, 2014, and is opportunity-driven, focused on results, and geared toward maximizing economic opportunities for aboriginal communities and businesses in the north. It is simpler to apply for funding under NAEOP, and it's easier to administer, as the program operates with one set of terms and conditions instead of four. We used this program renewal as a catalyst to ramp up our efforts to improve our business and administration processes for project assessments. The same approach was adopted to develop the agency's performance measures. One by one, existing measurement strategies were reviewed and updated to reflect our operational and reporting needs. I am pleased to say that all of our measurement strategies have been renewed, are measurable, and are relevant.

With the new measures are new tools to track results. Each contribution agreement is now entered into a new tracking system and data is gathered on proponent reporting requirements. To ensure that tools like these are used properly, we took the opportunity to update all of our supporting program documentation and implemented training for all of our program officers.

Consistent use of these new tools will improve monitoring of the results achieved from our investments. We will also be examining these tools and processes on a regular basis to make sure they remain current and effective.

As part of our response to this audit, we have now initiated an internal process in which our chief financial officer and his staff monitor our contribution files via spot checks to help identify any emerging issues we might encounter as well as to monitor how these new tools are working.

One observation from the Auditor General is that the process to complete a contribution agreement was long. We took this opportunity to review our business processes and service standards to speed things up. We are consistently meeting our 90-day completion standard, which starts once we receive a complete application for funding.

The new tracking tool for proponent reporting requirements has helped us monitor receipt of reports as well as the often considerable back and forth exchanges it takes to receive these reports. Monitoring using the new tool has shown that we are now consistently applying payment terms and withholding final payment, as needed, should final reports not be received in a timely manner.

I'd also like to talk about what the agency is doing to create a workforce to fully establish its headquarters in Iqaluit.

We have completed a human resources plan, which includes an Inuit employment plan and a strategic staffing plan. These set the agency's overall strategy to recruit and retain a skilled, professional, and diverse workforce with an emphasis on the needs in our Iqaluit office.

We see these tools as essential in what is in fact a very competitive market for talent in the north. One innovative initiative in this regard is the Inuit learning and development pilot project. Working with other federal departments in Nunavut and with Nunavut Tunngavik Inc. and the Government of Nunavut, we provided work experience and learning activities for 12 Inuit participants over a 16-month period. Already we are seeing the benefits of this project and are in the process of hiring some of its graduates.

I'm also pleased to report to the committee that we have recently hired a new director general of operations who is based permanently in Nunavut. We are also in the process of running competitions for key positions in policy, as well as for a manager of finance. As other corporate services positions in Ottawa become vacant, these too will be staffed in Iqaluit.

The agency is making an important contribution to advancing economic development in Canada's north. At the same time, we understand the importance of efficient and effective program delivery, and we are committed to ensuring that we continue to improve our approaches in these areas.

I would be happy to take any questions from the committee.

[The Chair, NDP, David Christopherson]

That's very good. Thank you, both.

We will now begin our questions in the usual rotation, beginning with Mr. Albas. You, sir, have the floor.

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

Thank you, Mr. Chair.

I would like to thank the witnesses for being here today. It is important for our country to study this report.

This is the first opportunity I've had to ask questions on the Canadian Northern Economic Development Agency, or CanNor. Since I am not familiar with it, I was just hoping, Ms. King, that you might be able to mention your mission statement as an agency, what you were created for and intended to do.

[Janet King]

Canadian Northern Economic Development Agency was established, as was mentioned by the Auditor General, to support economic development across the three northern territories. We are housed in the north. We are deliberately headquartered in the north, so that we can be on the ground working with partners across the north to continue to build economic development.

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

Would you say that your agency is set up to create social economic benefits for people living in the north?

[Janet King]

Yes.

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

Further to that, I would just like to hear from you or Mr. Bloom, specifically, if you have any kind of statistical data that shows the investment by the Canadian taxpayers has been spent well and has had the intended effect for the benefit of northerners.

[Mitch Bloom, Vice President, Policy, Planning, Communications and NPMO, Canadian Northern Economic Development Agency]

Measuring economic outcomes is probably one of the toughest things we do in this country. We have our central bank and countless others trying to measure that.

Having said that, when we were created, we started a process of trying to find ways to measure the northern economy, which I assure you is not like the rest of Canada. It is unique. If you visit our website—and I encourage you to have a look—you will see that we have a number of indices that we've actually built in order to follow unique aspects of the northern economy. The focus is not just about gross domestic product and not just about job creation but about earnings in households, knowing some of the socio-economic challenges, and looking at household creation in general.

We try to pull all that together to monitor those. Those are kinds of macro measures we use to follow the overall economy. We do that because, as an agency, as Ms. King said, our job is to follow all of that.

In addition to that, as we also noted in the opening statement, we measure all of our activities on a much more specific level. It would take too long to go through it all, but that's part of the job as well, not just the big picture but the small ones as well.

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

The Auditor General mentioned in his opening statement that as of March 31, 2013, the agency had signed 345 contribution agreements with recipients under your three main programs. Do you have any data that you could share with us today saying that there has been a positive benefit to northerners?

[Mitch Bloom]

Interestingly enough, before I came in here I pulled out our departmental performance report, which is, as you know, a report to parliamentarians. It has our latest numbers with respect to the impact of our programs and our operations. You can't get fresher than that. It was tabled in Parliament almost a month ago to the day. That gives you an illustration of that.

As I suggested, our website tries to contain as much up-to-date data as we can share with Canadians. It's a lot of work for a small organization, but we think it's important to share that information. It is kept current as well. We updated it as recently as two months ago, pulling together a lot of sources of data to keep it current.

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

Okay.

I think it's important to perhaps start with the recommendations of the Auditor General. The Auditor General has made a number of them, and the agency has agreed with them and is looking to implement them.

Recommendation one, in paragraph 6.20, states as follows:

The Canadian Northern Economic Development Agency should ensure that complete assessments of eligibility for assistance under its economic development programs are completed and documented as required by the Policy on Transfer Payments. In cases where applications are incomplete, the Agency should work with applicants to ensure that they provide all information required to complete assessments.

Ms. King, you have said that you agree with the Auditor General. As the chair said earlier, you've submitted an action plan outlining how your agency will adopt those recommendations.

Can you please specifically give us an update on recommendation one and on what you have done to systematically address the concern laid out?

[Janet King]

We've done several streams of work responding to this particular question, the first being developing detailed program information for the two programs I mentioned earlier, the northern aboriginal economic opportunities program and the strategic investments in northern economic development. We worked through them in great detail to be able to post on our website complete information about the programs and to share that.

We also redeveloped very detailed program application forms for both of those, updated and aligned with the program guidelines themselves. They were completed and posted in the spring.

We developed new program guidelines and the associated project assessment forms for the two programs—consistent, modern, and aligned with all the new guidelines—for our economic development officers as well. That was completed in July.

I will note that I can update one piece from the table that we submitted to the committee. It did say that the SINED program guidelines would be completed by November 2014. I can report that those have now been completed. That's another piece that has been completed.

In terms of another significant aspect, our program officers work across the north, with individuals in Iqaluit, Yellowknife, and Whitehorse. We needed to make sure they were up to date and well informed on all of these changes and the new tools. We conducted very comprehensive training and planning sessions for our officers regarding the program renewal rollout and implementation so that they were enabled to make these things work well. Those were completed in the spring, in March to May of 2014.

[The Chair, NDP, David Christopherson]

Very good.

Thank you, Mr. Albas. Your time has expired.

We'll now go to the official opposition, beginning with Mr. Allen.

You now have the floor, sir.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

Thank you to our guests.

I noted, Ms. King, that in your opening remarks you said you've been president of the agency since literally this summer.

[Janet King]

That's right.

[Malcolm Allen, NDP, Welland, ON]

Congratulations to you. Were you with the agency beforehand, or did you come from somewhere else?

[Janet King]

I was previously with Aboriginal Affairs and Northern Development Canada. I was responsible for their northern affairs organizations. I was in that job for about three and a half years. I did work very closely with CanNor. The two organizations share a lot of interests and we work together closely.

[Malcolm Allen, NDP, Welland, ON]

But you didn't have any responsibility for the agency prior to that. It's how I framed the question; in other words, my intention would not be to ask you what happened before if you weren't there. That's why I wanted you to clarify that you didn't perhaps have another position inside, so I could ask you to review the question in that way.

Let me take you to page 19 of the Auditor General's spring report, chapter 6, under 6.77. I'll read the first half and I will give a quick quote from the bottom. It says:

The Canadian Northern Economic Development Agency has not managed and delivered selected economic development transfer payment programs in accordance with key requirements of the Policy on Transfer Payments. The Agency’s administration of contribution agreements is weak, monitoring of recipients is inadequate, and the Agency has not measured and reported on whether its programs are achieving their objectives.

I don't think that's a standout recommendation of an agency that's performing well.

I will go on to say, because the Auditor General did say it in the chapter, and I know that my friends across the way will point to it, but let me do it first:

However, the Agency has begun to address these issues. In 2012....

It goes on to talk about how those issues were addressed.

In your limited time there you seem to have made efforts to implement some things. I recognize it is a very short period of time, Ms. King. July to December is not a very long period of time to try to measure in comparison to what really was—if one has to give it a grade—about a D minus for the first half, obviously before you arrived prior to 2012.

Where do you see yourself now in that transition to perhaps getting closer to a passing grade?

[Janet King]

I would like to comment that before I arrived, the agency had done substantive work both during the time of the audit and subsequent to the tabling of the audit in terms of addressing the issues tabled here, so substantive work had been done across the organization. You can see that recorded in the times of completion on the right-hand side of our management action plan. I do want to credit much work that was done beforehand.

When I arrived in July I certainly took a hand in those elements that were still outstanding and worked with the agency to conclude our requirements on that.

We have a few items left, largely to conclude implementation. I have made it a top priority for myself and for the organization to both conclude those requirements and to make sure they remain sustainable. It's a top priority for me and the management team.

[Malcolm Allen, NDP, Welland, ON]

I appreciate that.

Let me take you to your notes. I think it's at page 6 you noted a human resource issue, trying to recruit people either in the north or to the north, recognizing that you're trying to recruit initially in the north. It would seem that the mandate is to try to do that first.

But I didn't see anywhere in this where it says that we're actually going to meet the objective of having the entire office in Iqaluit...in the sense that yes, there is an office up there, but it's not fully staffed. I think part of your comment was that as an officer becomes vacant.... In other words, if someone in Ottawa leaves, the replacement will be made in Iqaluit.

Can you tell me how many that is? Is that two, three, a handful, or is it a lot more?