Government Operations Committee on May 30th, 2006

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Yes.

[Charles-Antoine St-Jean]

There is no comptroller general who recommended this treatment. We've got to be very clear. The advice was received from the Department of Justice as to how this transaction should be recorded. At the time, my predecessor, maybe the deputy, maybe the Auditor General....

[Sheila Fraser]

Yes, as we note in the report, the acting comptroller general at the time has since become Deputy Auditor General.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Okay.

[Sheila Fraser]

I will make it very clear--and I'm sure he will, if you ask him in the next hearing--he was not in agreement with the accounting treatment.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Fair enough.

My next question is this. I'd like to do a reality check. I asked if the system was complex or if it was simple. The reason is that I had, in my previous life, been involved in a system that the current Treasury Board minister had indicated would cost $5 million. Then it went into half a billion dollars, and it's still not running. It's a social assistance review system, and it's a boondoggle.

But I'm not into a destruction mode; we don't destroy systems. If we go step by step, we say we have created a system, and it appears that the police say they are using it. The chief of police in Toronto and others have said they are using the system.

Referring to the recommendations the Auditor General has made, Mr. Baker, the department has agreed that those recommendations have to be implemented. In your opinion, what are some of the checks and balances that the gun registry has put in place that will avoid this?

My other question is, as you are now the chief operating officer of CRA, and CRA is going through a system, how will that experience translate there?

[William Baker]

This is rough.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

You know, we as parliamentarians get it. I am very sensitive to the fact that we have now started an Afghan mission and we do not even know what the costs are going to be, so estimates are going to be important. As parliamentarians we have to be responsible, not partisan.

[William Baker]

There are two things. First of all, on the whole issue of the costs, I think, and Auditor General Sheila Fraser has confirmed, that the costs we are reporting to Parliament are accurate. We at the Canada Firearms Centre, and now the RCMP, have systems in place now that accurately track and allocate costs. I have absolutely no hesitation in advising any member of that, and you can rely on the reports that are provided to Parliament.

In terms of information about effectiveness and so on, that is being developed as we can. One of the difficulties with something like gun control is that it is an extremely complex social phenomenon in terms of assessing its impact. It's been observed, and it's also been observed in the Auditor General's report, that it will take some time yet before this program has had enough experience that the right specialist can come in and make a determination as to the overall impact.

As for systems, whether they be at the Canada Firearms Centre or Canada Revenue Agency, or wherever, you're absolutely right, there's quite a history at provincial, municipal and federal levels of big systems costing a lot more than people thought they would, and there probably will continue to be lessons to be learned about the proper control regimes that need to be put in place.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

But this is where the problem comes in. Bureaucrats tell the politicians it's going to cost $2 million, but who does a reality check that it won't cost $2 million? The systems are complicated.

Madam Fraser, I asked you in a previous committee meeting whether anybody has done an evaluation of what a large system should do. Is there any way the external auditor can check with the internal auditors and say, you guys are way off your mark, and don't try to fool Parliament into thinking this system is simple, as it's going to be complicated. Do you do reality checks to say, here is the benchmark, here is what we do, here is what the contingency will be? I am just floored that we are being given information that we can't even make realistic decisions on, so where do we go around?

[Sheila Fraser]

I can give one short element of a response. We actually have an audit under way on systems under development, which we are planning to report this November. I would hope that we will be able to bring some of that information forward to Parliament in that audit.

[The Chair, Liberal, Diane Marleau]

Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you.

Can I split my time with my colleague Dave?

[The Chair, Liberal, Diane Marleau]

Certainly. That gives you two and a half minutes each.

[Mike Wallace, Conservative, Burlington, ON]

Okay, I'm a very specific questioner on these things.

In your report, you talk about $82 million to operate annually. Is that net of revenue?

[William Baker]

No.

[Mike Wallace, Conservative, Burlington, ON]

That's not net of revenue, so that's the actual cost.

[William Baker]

That's correct.

[Mike Wallace, Conservative, Burlington, ON]

Revenues seem to be declining as we go forward. Will that trend continue?

[William Baker]

It certainly will. First of all, beginning in May 2004, the decision was made to eliminate the transfer registration fee, so obviously there was an effect on revenue. Then the announcement of May 16 or 17—pardon me, as I don't know if I have the day correct—to eliminate the licence renewal fee will have a dramatic impact on the revenues.

[Mike Wallace, Conservative, Burlington, ON]

So in reality, the public should know that based on the system we have now, every decade it's going to take three-quarters of a billion dollars to operate the system. That's what we face.

[William Baker]

Just quickly, as I indicated, with the $10 million reduction announced by the minister—

[Mike Wallace, Conservative, Burlington, ON]

That's why I said three-quarters; otherwise it's $80 million.

[William Baker]

Exactly. There's still some revenue that comes in. I believe it's in the area of $4 million or $5 million per year for other duties, so it would perhaps be similar.

[Mike Wallace, Conservative, Burlington, ON]

Maybe you can't answer my last quick question, but from the beginning of this program, I don't see anywhere where the business plan could ever have possibly said the net could have been $2 million. We're at a 10% revenue-to-cost ratio here. We've got 20% indirect costs, though I'm not sure what they are. I don't know where we got any concept that this would be.... I know you weren't there at the beginning, but where was the business plan that said it came to $2 million?