Diane Marleau

[Supply, February 22nd, 2005]

Mr. Speaker, we have already brought forward a number of measures to ensure the foundations report to the public and that is important. They do not always necessarily report to Parliament directly, but they do report to the responsible ministers. They do report to the responsible departments.

They cannot have it both ways. Either the foundations do good work, which they do, and they have admitted to that. So, tell me, what is the problem? The motion is one that we could have supported if it had not gone too far in demanding that the Auditor General be the external auditor of all foundations all the time which is really not something that can happen because some of the foundations are jointly managed by provinces. There are many provinces which would say to let them decide who will be their external auditor.

On the other hand, I still think that if it is federal money, our auditor should have the right to follow the money in the foundations. I would be prepared to support that part of the motion. The problem is that the opposition refuses to change its motion and it is just there to oppose and be negative. We are trying to work constructively and do good things.

[Supply, February 22nd, 2005]

Yes, Mr. Speaker, they certainly have and they have been able to fulfill some public policy issues. Members should speak to the many university students who have been able to benefit from the millennium scholarship. Think of the thousands of students across the country. Why was that foundation set up? It was set up so we could help poor students who were having a hard time going to university.

If we asked students who have had the benefit of these scholarships how they feel about the foundation, they would tell us that it has done great work. We could go down the list and find the same kind of response to them.

This is not about the work of the foundations. This is about who audits them and should the foundations have the Auditor General do compliance audits. We agree with that. It is the other external audit issue that we think is a little out of control.

[Supply, February 22nd, 2005]

Mr. Speaker, I will have to get back to the member on that one. I am sure that many of the endowments are done in the name of former Prime Minister Pierre Elliott Trudeau. Canadians valued his years in office and are happy to see these kinds of things occur.

We are just as concerned as the opposition is with how we spend money. I have been in the House for many years and I can honestly tell members that we have always wanted to do good things. Many of the projects that are funded through foundations are very good.

I do not think the Auditor General has ever said that she did not like the work that they did, on the contrary. She wants permission to do compliance audits and I am in favour of that. I do not think it is necessary for the Auditor General to be named the annual auditor. There are a lot of audit firms out there that are very capable of doing this work, and it is probably a better idea that the audit function be separate from what the Auditor General does. The Auditor General can take a fresh look and come out with a compliance audit which is what we are really looking for.

[Supply, February 22nd, 2005]

Mr. Speaker, I am pleased to have the opportunity to address the House on foundations and accountability.

Let me make it clear that the government welcomes the report of the Auditor General. We are committed to open, effective, accountable government and we take her findings and recommendations very seriously. I believe that we have taken significant action to date to enhance the accountability of foundations, and we will continue to do so.

The Prime Minister has described accountability not as a buzzword, but rather as our benchmark in changing the way Ottawa works. Certainly it is a subject well worth discussing, particularly when we are talking about responsibility to Parliament and to Canadians. Today I will focus my comments on the issue of accountability as it relates to foundations.

The government has been outspoken about its commitment to improving accountability. We have gone beyond words. We have backed up our words with concrete actions to build and strengthen accountability across government. For example, last week the President of the Treasury Board released a report containing the most comprehensive review of crown corporations in over 20 years.

We are equally committed to ensuring proper accountability within foundations. The proof of this commitment is that we have been working solidly over the last few years with a view to building the right accountability framework for foundations. It is important to acknowledge that when dealing with foundations, we are dealing with unique institutions, institutions that were specifically designed to work at arm's length from government.

In this respect foundations are no different from hundreds of other not for profit organizations that depend on federal grants and contributions. The big difference is that with foundations, the assistance is up front and long term in nature. It is essential to realize the importance of that fact. We have to recognize that the independence of foundations is one of the important factors of their success.

Let us look for a minute at why arm's-length foundations are used to achieve public policy.

And to do that, we have to think about the changing environment in which governments and the private sector operate, and how they evolve. This environment demands innovative ways of partnering with others through alternative means of service delivery.

During consultations by the government in the mid-1990s, business leaders and academics spoke of the need for increased funding and a more innovative investment approach to ensure that Canada became a research leader. They encouraged the government to explore new funding mechanisms, and to look at the possibility of achieving public policy objectives through independent organizations that could apply expert insight to effectively target specific issues.

In the 1997 budget, the first large foundation was born, the Canada Foundation for Innovation. Today there are many more and they are doing fine work.

As one enthusiast of the CFI put it in a letter to the Prime Minister last December:

I'm sure you're aware what an impact CFI has had on Canadian science. A very important corollary to this is the incredible boost of morale or dose of optimism that has been injected into Canadian science.

Of course, while clearly recognizing the benefits of arm's length expert foundations, the government has also recognized the need to ensure transparency and accountability.

Concrete actions were set out in the 2003 budget which announced a number of changes to improve the accountability of foundations to make them more accountable to Canadians and parliamentarians. These changes were in direct response to recommendations of the Auditor General.

The budget also set out in very clear terms the principles under which foundations are used by government to deliver public policy. They are as follows: Foundations should focus on the specific area of opportunity in which policy direction is provided generally through legislation and/or a funding agreement; foundations should harness the insight and decision making ability of independent boards of directors with direct experience in and knowledge about the issues at stake; decisions by foundations should be made using expert peer review; foundations should be provided with guaranteed funding that goes beyond the annual parliamentary appropriations to give the foundations the financial stability that is essential in their specific area of opportunity; and foundations should have the opportunity and hence the ability to lever additional funds from other levels of government and the private sector.

The budget laid out steps to improve the accountability of both ministers and foundations in a number of areas, starting with parliamentary review.

The government set out measures to ensure that the establishment and funding of foundations is adequately reviewed by Parliament.It also committed to ensuring parliamentary approval of purpose and funding through direct legislation for foundations that are significant either from a policy or financial perspective.

And it was agreed that, in all cases, Parliament needs to approve funding for foundations. Each individual grant is listed separately in the estimates. These measures increased accountability to Parliament. But we also looked at how to improve public reporting. And we took action.

For example, today, foundations are required to provide corporate plans annually to the minister responsible for administering the funding agreement. These are required to include planned expenditures, objectives and performance expectations relating to the federal funding. And it is important to note that summaries of these plans are to be made public by the responsible minister and to be provided to Parliament.

In addition, the departmental reports on plans and priorities, which are tabled in Parliament, now include the significant expected results to be achieved by the relevant foundations and are required to situate these within the department's overall plans and priorities.

As well, the department responsible for administering the funding agreement is required to report on the significant results achieved by the foundation, or foundations, in its departmental performance report for the duration of the funding agreement and to situate these within the department's overall results achieved.

The annual report for each foundation, including relevant performance reporting, audited financial statements and evaluation results, is presented to the minister responsible for the funding agreement and made public. The reports of foundations created explicitly through legislation are tabled in Parliament by the responsible minister.

All foundations' annual reports must contain performance information, as well as audited financial statements prepared in accordance with generally accepted accounting principles.

The accountability of foundations was further enhanced through the following measures that touch on compliance with funding agreements.

Foundations are required to conduct independent evaluations, present these to the minister responsible and make them public. Departments then incorporate any significant findings in their annual departmental performance reports, which are tabled annually in Parliament.

Funding agreements with foundations contain provisions for independent audits of compliance with funding agreements and for departmental program evaluations.

The compliance audits can be undertaken by departmental internal auditors, external auditors or, at the request of the responsible minister, by the Auditor General.

There are also provisions for intervention in the event the responsible minister feels there have been significant deviations from the terms of the funding agreement.

Further, in all new funding agreements, provisions are put in place so that the responsible minister may, at his or her discretion, recover unspent funds in the event of winding up.

I trust members will agree that I have just outlined a very comprehensive government program of increasing the accountability of foundations. I want to emphasize that our commitment to enhancing the accountability of foundations continues today.

Since the measures announced in budget 2003, the government has taken numerous steps to strengthen the overall accountability and transparency of foundations. Not only have our actions addressed many of the earlier concerns of the Auditor General but in some cases we have gone beyond the recommendations. We have done this while still respecting the spirit and intent behind the establishment of the foundations.

Let me start by talking about reporting to Parliament and the public.

All statutory reporting requirements of Parliament are being met. For many years now, ministers have tabled in Parliament the annual reports of foundations, which contain audited financial statements representing 80% of all transfers to foundations as identified by the Auditor General.

Foundations regularly report on their plans and results to departments that are required to incorporate significant items in their reports on plans and priorities and departmental performance reports to Parliament. The Treasury Board Secretariat has issued guidelines on these reporting requirements.

Let us consider a few points on the reporting by sponsoring departments. Result based management and accountability frameworks have been developed. Many departments now have the ability to undertake evaluations that can assess the horizontal integration of their programs with those of the foundations.

On another front, progress has also been made when it comes to the question of ministerial oversight. Changes have been brought to strengthen the default provisions of the funding agreements to enable corrective action. These changes respect the independence of not for profit organizations and do not involve the unilateral redirection of funds by the government.

Funding provisions and legislative changes have been made to permit the recovery of unspent funds should a foundation be wound down.

Transfers to foundations are accounted for in a manner that is consistent with the treatment of other transfers such as those to provinces which the Auditor General has accepted. Such transfers provide long term, stable funding that is needed to attract financial resources and expertise. Government has the financial flexibility to fund these priorities. Such decisions and announcements have been made throughout the year and not only at year end.

I have outlined just some of the many actions that the government has taken in response to recommendations from the Auditor General on foundations. While there are still some areas of disagreement, there is also agreement that good progress has been made.

For example, last week's Auditor General's report noted some positive developments, for example the fact that improvements have been made in reporting to Parliament and the public, and that provisions for corporate plans and annual reports have improved. There were many other positive comments.

In closing, I think it is worth mentioning that lots of very good work results from these foundations. All of their websites provide more comprehensive information on their plans and results and these foundations are working across the spectrum, from health research to green initiatives for the environment, to strengthening the research capabilities of our universities.

I do not support the motion before us today because it goes too far in asking that the Auditor General be the one to do both performance audits and the annual audit of each foundation. I do not think the Auditor General has to do the audits of each foundation every year but I think she should be allowed to do performance audits.

We remain committed to continuing to work with the Auditor General to improve the accountability of these foundations so they can continue to do their good work.

[Supply, February 22nd, 2005]

Mr. Speaker, I would like to straighten out a few facts. Foundations are asked to be audited, and they are audited on a regular basis. The departments responsible for those foundations have to ensure that those moneys are well spent.

It is not that the foundations are not audited. It is that the Auditor General cannot on her own go in and follow the money. That is what one says when one wants to have value for money audits. That is why we have been talking on this side about allowing the Auditor General to follow the money and not necessarily have to do the external audit every year, because she does not do the audits of every department every year. We should check with public accounting firms that can well do the audits. I think the problem would be solved if the Auditor General were allowed to do her own value for money audit.

I do not think the Auditor General has asked to be the external auditor of every foundation every year. I do not think that is in her report. However, she does want to have access to them, and we believe she should.

[Supply, February 22nd, 2005]

Mr. Speaker, the hon. member spoke of the Canada Health Infoway Inc. I do not know if the hon. member is aware of the fact that the Province of Quebec is an equal partner in this foundation. I would like to know if the Bloc has spoken with its Quebec counterparts. Are they in favour of having the Auditor General of Canada appointed to audit this fund every year, this fund, which is managed in partnership with all the provinces, including Quebec?

We are not the only ones in charge of these foundations. As I have already said earlier, I would be pleased to see the Auditor General have oversight over the Canadian funds, the dollars we have invested in these foundations. In my opinion, the ideal solution would be to let the foundations find their own auditors, when they want to, but the Auditor General would be given the right to track any federal funding and report here, to Canada's Parliament.

Does the hon. member agree?

[Supply, February 22nd, 2005]

Madam Speaker, I have a question. I agree that there has to be some kind of performance audit wherever and whenever the Auditor General wants to go, but does the member really believe that it is absolutely necessary over and above looking at giving her the chance to follow the money and do performance audits?

Does the member really believe that she should be the external auditor for each and every foundation, to do the audit each and every year, something she does not even do with departments in the Government of Canada? Does he not think that these foundations can have the choice of picking their auditors for their yearly audits?

Meanwhile, yes, we should change the rules to allow performance audits by the Auditor General, for her to do what she does for the Government of Canada everywhere. To me, that makes a lot more sense. I would certainly be prepared to support the member's motion if he were to remove the last part which says that the Auditor General has to do everybody's audit every year.

[Supply, February 22nd, 2005]

Mr. Speaker, would the Bloc Québécois be prepared to consider the possibility of letting the Auditor General have oversight of amounts of money, without being obliged to audit all the foundations? She could be free to report on this subject, without acting contrary to the foundations' wishes as regards their annual audit.

[Civil Marriage Act, February 21st, 2005]

Madam Speaker, one of the things that everyone has to remember is that in the end the government is responsible for who is appointed and for any kind of governance that is under its rule. Much as we want to make sure that all appointments of all chairs and all CEOs are filled with qualified people, there are many ways of ensuring that this happens.

We are going to work with boards of governors to ensure that as many ways as possible are looked at and used to identify the proper person. I think it is very important for this to occur.

One must always remember that opposition members will never be happy with whomever we appoint because they did not pick them. Unfortunately, that is the case. Much as I know that we will do everything in our power to have the best, the most qualified person, the most representative person, in the end we, not the opposition, will be responsible for that appointment. The opposition is only responsible for criticizing.

[Civil Marriage Act, February 21st, 2005]

Madam Speaker, since the president's March 15, 2004, announcement of a new appointment process for top executives of crown corporations, the government conducted a review of crown corporation governance.

On February 17, just last week as a matter of fact, the president tabled in the House of Commons a report entitled, “Meeting the Expectations of Canadians--Review of the Governance Framework for Canada's Crown Corporations”. This review is the most comprehensive review of Canadian crown corporation governance in 20 years.

As part of our findings, it was determined that a number of refinements to the interim process were needed to achieve a correct balance from the government's perspective as owner and shareholder of the corporations.

On boards, as in the private sector, chairs and directors represent the owner. In this case, the owner is the Canadian population through the government it elects. We believe, consistent with best practices, that the government, as representative of the owners, has to take responsibility for identifying candidates that are its representatives.

We are looking for people who are committed to the principles and values of public service and who will perform their duties with integrity. We will do so, however, in close consultation with the boards of directors, taking into account their needs.

To ensure greater transparency, we will be establishing a central website for identifying chairs and directors, accessible to all Canadians, so they can have an up to date and accurate picture of the vacancies, their selection criteria and board profiles, and a listing of appointments is the first step on this path.

The board of directors, in consultation with the government, will determine the selection process for the CEO. To ensure that potential candidates are not in conflict of interest, the government will continue to conduct background checks prior to making any appointment.

Canadians can be reassured that the appointment process for Canada's crown corporation boards of directors meets Canadians' standards and expectations of ethical conduct.