Government Operations Committee on Dec. 5th, 2006

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Madam Chair.

Good morning again to you Madam Auditor General. I appreciate all your hard work to help us understand how government works. I know that Canadians who pay their taxes and work hard for their money want to get the best value possible for the dollars they send to our federal government.

I want to say initially that while your job is to point out where the deficiencies are and where we need to do better, there are a lot of things in government that work well and where Canadians do get good value for their money.

Obviously the key for us is huge amounts of money going into areas where there isn't proper accountability. We need to focus and improve on those areas. The IT spending really jumped out at me. You indicated there has been $8.7 billion approved for new business projects for the federal government over the last three years. That's a large amount of money.

Mr. Kramp's example of an IT project, on a small level, gone awry...I know others had that experience. I also had that experience when I was newly elected, with the first office I looked at renting. The landlord had stars in his eyes at the thought of a big fat government cheque coming in. He promptly beefed up the price, and I promptly walked away and went some place where I got a good deal.

I guess these are things Canadians worry about: that we are getting good value for the money and that we know what we're doing with the money.

What jumped out at me in chapter 3 was when you said that most of these large information technology projects suffered from the same shortages of experienced and qualified people and inadequate analysis of key business issues as before. This is a long-standing problem. You found that four of the seven projects were well-managed but that the quality of management varied widely, and those with weak project management practices experienced long delays and cost overruns.

There are all kinds of good examples in the private sector and in the public sector. What is the big stumbling block for our government in identifying best practices and getting those adopted, especially with these large IT projects?

[Sheila Fraser]

The framework that exists has been in place since 1998. It's a good one. It could be updated, but I think they have the framework there and they know best management practices. The problem is when they start these projects and don't apply them. It's the same thing. We don't need more rules and regulations, we just have to use and apply what is in place.

One particular issue--there's obviously the capacity of human resource issues--is that the whole business plan at the very beginning is really critical. If you don't have a good business plan, your risks of not succeeding go up significantly. With some of these very large projects we looked at, there were no complete business plans, even though the government asked for them four and five times. Funding was given on a temporary basis, it would continue, and they had been asked for a plan. It's as if you get into these things and they take on a life of their own.

I think there really needs to be more rigour. That's why we would have liked to have seen the analysis by the Treasury Board Secretariat, because it plays that challenge role. That might be something the committee would want to look at: how it is going to ensure there are good business plans. I should add, too, that you might want to question them, because some of the projects where we found weaknesses were actually Treasury Board Secretariat projects. It has to ensure that it applies this framework to its own projects, as well as requiring it from others.

[Peggy Nash, NDP, Parkdale—High Park, ON]

I can see, for political reasons, that there's public pressure to get something up and running, people are waiting, let's say, for cheques, or for a particular program to get going, and there are time constraints. It seems pretty basic that if you don't know where you're going you might end up some place else, as Yogi Berra said. If you don't have a good business plan, goodness gracious, you might not achieve the goals in your business plan.

One thing that a couple of my colleagues raised, and that occurs to me, is that in our discussions around accrual accounting.... Taking your lead, and the lead of other witnesses here, the key is showing leadership and the front-end loading of any program with clear direction, a clear plan, lots of training, and really getting people onside. This will of course involve additional investment in IT and a lot of marshalling of human resources.

It does concern me that we don't have a grip on these systems if we are moving to accrual accounting on a going forward basis. These are the very things we need to be really on top of. Could you comment on that?

[Sheila Fraser]

I think you're absolutely right. I think, though, we should recognize that these projects are brought in to improve services and programs to Canadians. Government does have to invest in technology. We see the private sector investing significant sums of money in technology in order to improve their business practices; government has to do the same.

There will continue to be large investments in IT because they tend to enable a lot of these improvement processes. If government does not manage them well, obviously they will overspend. Projects could go off the rails, but perhaps more importantly, they will not have improved their services and their business practices.

They have to get much better at doing this. We need to be aware of those risks and we need to make sure they have good business planning in place. The committee could certainly help in that, if they do go to the accrual accounting, by having regular discussions with them to ask what their plan is, where they are in it, and what risks and difficulties they are seeing, because this will be a project over several years as well.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

[The Chair, Liberal, Diane Marleau]

We'll go to Mr. Bonin.

[Raymond Bonin, Liberal, Nickel Belt, ON]

Thank you, Madam Chair.

My thanks to our guests.

It's nice to see you again. Even in politics, sometimes we have occasion to say “I told you so”. I'm not saying this to you.

I have a case in my office from a victim of crime who had a complaint about Corrections Canada. I have a very thick file, if you're interested. The whole case was around reporting a complaint, and the people who were the subject of the complaint were the ones doing the investigation. It was one cover-up after another. Now I look at chapter 11, and you talk of Corrections Canada.

As a result of this complaint, we made it a priority in my office, and I started developing private member's bills to address the issue of Corrections Canada. I saw Corrections Canada mobilize against my private member's bill. I had many visits from them in my office. They attended committees. They did everything to kill these private member's bills. One part of those private member's bills that they were most concerned about was the creation of a board of directors, yet now we see everything you were able to discover.

When you have a complaint with Corrections Canada...they don't have a board of directors. They have one person in charge, a person whom I think they call a commissioner. The complainant, my constituent, this mother of a victim of crime—which makes her a victim also—persisted. I was pushing so hard here in Ottawa that, all of a sudden, she told me, “I can't talk about it anymore.” I don't have to be a lawyer to know that they settled, they paid, and the condition was that she couldn't talk about it anymore.

I know they are doing a lot of this, and it may be a reasonable practice. It may be the way we address complaints in law cases, but I call the fact that they're not accountable to anybody a crime. What came out of all of this? The one person in charge of Corrections Canada was moved—probably promoted, because that's how you compensate for weaknesses in a corporation of this size when you don't have a board of directors. But the new person coming in doesn't have a clue what's going on around them.

I'd like to ask you three questions. First of all, did you find evidence of employee perks around the ombudsman—the correctional investigator, as you call that person? It's been suggested in the media. I don't base anything on what I hear in the media, but I'm asking you if you found evidence of unusual perks. If so, have those people been charged?

The RCMP can take fifteen years to investigate this, but to me, when an audit determines unethical behaviour, well, unethical behaviour in government is theft. Could you tell us if the correctional investigator has been charged?

The next one is a two-part question. Can you give me some logic as to why Corrections Canada would not be subject to having a board of directors overseeing the operation, instead of one person with more power than the Prime Minister when it comes to talking about information in Corrections Canada, information that they refuse to give to the minister, information that they refuse to give to anyone in Parliament? They hide behind the fact that it's the Privacy Act that prevents them from divulging anything about Suzack. In his case, he was being transferred from maximum to medium security within two years when he had life. It's stuff like this, but they refuse to give information to the minister.

I'd like to tap your expertise. I think I know why they resist, but could you give us a bit of information as to how this would change your job if you had someone accountable to talk to, and the minister's job, if, when there was a problem, he could talk to the appointed board, which would at least fear to be replaced? The system, the way we have it now, is full of people who are promoted when they get in trouble.

[Sheila Fraser]

On the question of the correctional investigator and the question of payments made to employees, we did see some inappropriate payments to employees. In fact, when it was known that there would be a surplus at the end of the year in that office, the surplus was essentially divided up amongst the employees, in equal amounts, and there was an effort made to then calculate the number of hours of overtime. It was indicated that there were overtime payments, and there was a fair bit of work that would of course go into that, because people all had different pay scales. They would calculate the number of hours that would give them that amount of money. We are not sure, though, on what basis this was presented to the employees, and government will have to decide if any further action needs to be taken. It could have simply been presented to them as some kind of a bonus or something in the year.

I know the correctional investigator has not been charged to date. The file was referred to the RCMP about a year ago. I do not know if they have even begun an investigation. That could be a question to ask of them.

On the governance of Corrections Canada, Corrections Canada is considered to be a department like any other department. That's why it doesn't have a board of directors. It reports to a minister. We haven't really looked at that whole question of information, but certainly I would expect that the minister would be able to get information relating to the operations within Corrections Canada.

[Raymond Bonin, Liberal, Nickel Belt, ON]

Although they're part of a department, they don't behave as a section of a department. They behave more as if their operation is at arm's length from the government. That I'm sure of.

[Sheila Fraser]

I don't know why, but I can understand that there are certain agencies—for example, the police forces—for which there is a certain distance, like that between government and the national police force.

[Raymond Bonin, Liberal, Nickel Belt, ON]

But they have a police commission.

[Sheila Fraser]

They have a commissioner, but I would think Corrections Canada should behave as any other department. It could be an issue—

[Raymond Bonin, Liberal, Nickel Belt, ON]

They don't.

[Sheila Fraser]

We could consider if we should look at that or not.

[Raymond Bonin, Liberal, Nickel Belt, ON]

I'm interested in knowing where—

[The Chair, Liberal, Diane Marleau]

Thank you very much, Mr. Bonin. Perhaps we can give you another turn. You're well over your time.

[Raymond Bonin, Liberal, Nickel Belt, ON]

Am I?

[The Chair, Liberal, Diane Marleau]

Yes.

Mr. Albrecht.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you, Madam Chair.

Maybe I can help my colleague Mr. Bonin out a bit here. I want to follow that same line of thinking for just a minute.

Thank you very much for the work your department does in ensuring accountability and good use of taxpayers' money.

You indicated that not only was this correctional officer in the wrong for a period of six years, I believe, but the executive director was also aware of this situation and took no action. Just to follow up, you indicated that there may be a police investigation at some point. What recourse do we have? We can never recoup the loss of trust in government officials. Here's an ombudsman who should be above reproach in terms of his actions, so we can never recoup that. But what are the chances of us recouping some of the costs that were misappropriated in terms of him not putting in his hours of work and billing government for travel and hospitality expenses that weren't related to his position?

[Sheila Fraser]

Government has certainly indicated that they will undertake action to collect amounts inappropriately spent by him. We have already been contacted by the current correctional investigator. It would be his responsibility in that office to establish the amounts that are owing. He is working, I know, with the Treasury Board Secretariat. That process is beginning, and there will be a claim made against the former correctional investigator, I'm pretty sure.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you. Could you comment on the responsibility of the executive director as well--his superior in this situation?

[Sheila Fraser]

We obviously believe that senior public servants--in fact, legally every public servant--have a duty under the Financial Administration Act to report any suspected cases of wrongdoing. But I think it is particularly true that senior public servants, when they become aware of inappropriate behaviour, should take action.

This executive director was aware, perhaps not of all the payments but certainly of some of the behaviours and the fact that the former correctional investigator was not always present at work and had a duty, we believe, to report that, as did other people probably within that office.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you.

Could I just go on to a different thing for a few moments? In chapter 6 you talk about the old age security issues. You point out that the payment errors were in fewer than 1% of applications, and you're pleased with that, and obviously we should be pleased with that.

However, when you look at the number of dollars, with four million people receiving OAS now, and with that expected to double in 25 years, that currently accounts for 14% of the budget. Clearly there's a lot of money involved.

You also indicate that currently, or as of March 2005, there was an uncollected amount of $82 million. Again, that's a very large sum of money to the average Canadian.

What recourse is there for government to recoup that? What action is currently being taken to recoup any of those lost funds?

[Sheila Fraser]

Let me just start by saying that you are correct. This is a very important program, in terms of need for many of these people, but also in terms of size as well. Surprisingly to me, and probably to most Canadians, it is also a very complex program. There are a lot of really technical rules.

For Canadians who have lived here all their life, turned 65, and stayed here, it's fairly straightforward. But with an increase of immigration, there are a lot of technical rules about how long someone has to have been resident in Canada before and after reaching 65, and those will determine the pension amount.

As we say, the numbers will double within the next 25 years, and I would suspect as well, with increased immigration into the country, that the complexities will also change.

One of the issues that we noted is that the department doesn't have a very good system to manage quality overall. They do the tests, and they see that the error rates are low, but they need to have a quality management system in place to ensure that the error rate stays low.

When there are overpayments, there is action taken. They generally try to make arrangements with people to contribute a certain amount each month to pay down the debt. And I think we mention in the report--or maybe not--that about half of that is estimated to be not collectable, given the circumstances of the individuals involved.

One issue that we noted in there is that this management of these overpayments is not as good as it should be, and those receivables are not in the department receivables ledger, so it's sort of a separate system. It should have a little more attention given to it as well.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Am I out of time?