Public Accounts Committee on Nov. 27th, 2013

[The Chair, NDP, David Christopherson]

You have about 25 seconds.

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

Just so I understand the Liechtenstein project gave CRA the template by which they could, in fact, take advantage of these lists, do their research, do their diligence, and establish processes and methods of doing business and monitoring these types of situations in the future. Therefore, in whatever jurisdiction they enter, they will now have a template in place that will give them the skill set to do the job in monitoring and understanding what's going on in that particular tax jurisdiction.

[Michael Ferguson]

They managed the Liechtenstein list appropriately. It helped them learn how to deal with this type of situation, but there are still some things they need to tighten up.

For example, when we asked the agency whether they were going to continue with the types of agreements we were talking about, the agency told us they were not, but some of the individual people, the assessors and so on, were telling us they were going to.

Again, there was a lack of consistency about whether they were going to continue with the types of agreements we were talking about. They need to tighten up those things.

[The Chair, NDP, David Christopherson]

Thank you.

It's over to Monsieur Giguère. You have the floor, sir.

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

Thank you, Mr. Chair.

In point 3.47, which pertains to naval policy, you mention the importance of monitoring productivity and competitiveness. I did my homework and looked at the prices paid by foreign governments, and it was mind-boggling. Paying $700 million for a ship, as the French and the Italians do, is already a lot. Yet we pay $1.8 billion for the same kind of ship. That is a major cost discrepancy. We pay astronomical prices for our ships, and the only way to control those prices is to reduce the vessels' quality or quantity. Foreign governments have been working on standardizing interoperability policies and consolidating subcontracting purchases.

In our naval policy, have you noted whether a specific service ensures interoperability, standardization and order consolidation for ships from different services of our government?

I want to use the example of anti-aircraft guns. Our transport ships will be equipped with Mauser 27-mm cannons; our surface combatants will have Phalanx 20-mm weapon systems on board; and our arctic vessels will carry the Litton 25 mm. Couldn't someone consolidate everything? In this policy, have you noted a service that is in charge of reducing the price of vessels instead of simply reducing their quantity and quality?

[Gordon Stock, Principal, Office of the Auditor General of Canada]

Thank you, Mr. Chair.

It is very difficult to compare the construction costs from one country to another, especially from one shipyard to another. The costs of material and other elements vary greatly. The composition of workers and the travel involved also need to be taken into consideration.

When it comes to that, we have recommended assessing the productivity and determining whether it is effective.

On the other part of your question, we did not question the policy to build in Canada. That is the policy of the government, and we looked to see whether there were measures in place. The measures are still being developed, but we believe that the measurement of productivity will allow us to determine whether or not the ships are affordable. In terms of interoperability—

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

My question is relatively straightforward. Based on the policy you analyzed, is there an entity that focuses specifically on controlling—or even reducing—the rising ship prices through very simple policies applied by other countries to establish interoperability, standardization and order consolidation? Does that service currently exist?

[Gordon Stock]

I think that question should be put to the department. Our audit focused on other considerations.

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

When it comes to emergency services for first nations, it would appear that this segment of the Canadian population is always poorly served by the Canadian administration—be it in the area of health, housing, education, drinking water or environmental emergencies. The situation is simply unbelievable. Nothing is ever working as it should.

Is the persistency of their situation explained by a character flaw in the public service?

[Michael Ferguson]

As to emergency services for first nations, I think the fundamental problem was identifying roles and responsibilities, who is responsible for what, and at the end, what it came down to was that the department is in very much a reactive mode. The fundamental that needs to be fixed is making sure that everybody understands who is responsible for what.

The department has agreements in place with some provinces, but not with all provinces. The agreements that they have in place with some of the provinces do not cover all of the first nations in those provinces. It really comes down to defining who is responsible for what.

[The Chair, NDP, David Christopherson]

Sorry, but the time has expired.

We have enough time to squeeze in Mr. Hayes.

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

Thank you, Mr. Chair.

In Mr. Simms' initial comments, he was speaking of effective internal controls. In the same breath, he mentioned the words “shipbuilding procurement”, and then he went in a completely different direction. I'm thinking that might be seen as an insinuation that the shipbuilding procurement program doesn't have effective internal controls.

Mr. Ferguson, can you speak to whether the shipbuilding strategy has appropriate oversight and is being well-managed?

[Michael Ferguson]

In the audit we identified that they have an appropriate governance structure. We identified that they have assessed risks and have considered how to mitigate risks. We didn't get down to a level of detail of looking at internal controls, but we did say that they have an appropriate governance structure in place.

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

Did you evaluate the shipyard selection process? If so, what comments can you make on that?

[Michael Ferguson]

We evaluated the selection process. We noted a number of good practices: third party consultants were used; analysis was done; and there was a good governance structure in place. They have a risk analysis as well.

We noted one thing that we felt could have been done better, which was putting in place the guarantees. This happened after the selection. In general, we were satisfied with the selection process.

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

That's my three minutes.

[The Chair, NDP, David Christopherson]

That's right.

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

I'll honour my commitment, Mr. Chair.

[The Chair, NDP, David Christopherson]

You more than did that. I appreciate it. Thank you, sir.

With that, we conclude our rounds of questions and comments for today.

First off, let me thank Mr. Ferguson, our Auditor General, and all of his staff and colleagues for coming here today. We never tire of saying how much we respect the Office of the Auditor General of Canada and how much Canadians look to you and your office to be their eyes and ears in terms of the transparency and accountability here on the Hill.

We thank you very much for that, sir. We certainly thank you for your attendance here today.

Colleagues, before we break, I remind you that on Monday we'll be having a committee meeting. We have already agreed that we are going to hear four of the chapters in this report. There will be two selected by the government and two selected by the opposition. If they can't come to an agreement, then it will break down to one for the NDP and one for the Liberals. That's in addition to the three chapters the committee had previously agreed to hold hearings on, one of which was a government choice. The other two are opposition choices.

There is ample time for those hearings. I hope we're able to squeeze those in. Please bring your selections on Monday. Be ready to get to work, and we'll start scheduling these hearings.

With that, colleagues, this committee now stands adjourned.