Government Operations Committee on May 15th, 2008

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

I read almost all of your reports and refer to them on occasion. I have observed some deficiencies with respect to management in Canada.

Each time your Office looked into passports, National Defence, property and budgeting, deficiencies in management practices at various levels were noted, and your assessment would come as no surprise to me.

How do you explain this state of affairs? After all, there are some solid, competent managers working in different departments in Canada. What is your take on this situation that I find rather unfortunate?

[Sheila Fraser]

Perhaps it's natural for an audit to identify areas in which some improvement is needed. We also highlight sound practices in each of our reports, but these revelations rarely make the headlines.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

For instance, you have released a number of reports on small craft harbours. Since 2003-2004 and even before then, you have been bringing management deficiencies to our attention.

You are a champion of proper planning and transparency, but I'm afraid that we are never going to turn things around and that everything is being done not to improve management practices. It's disheartening, considering the tax dollars the Canadian government collects from the public.

[Sheila Fraser]

One of the recurring themes in our audit is the lack of management information. There is no basic system in place to provide managers with the information they need to make enlightened decisions.

That's likely the case here. Systems are needed to convey the right information, whether it be about inventory in Kandahar or beefed up surveillance systems. We need to invest in these systems and we need managers who have a clear grasp of their requirements.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Ms. Fraser.

[The Chair, Liberal, Diane Marleau]

You have the floor, Mr. Kramp.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, Madam Chair, and welcome to our guests again.

Hopefully before I finish my questions I will get around to accrual accounting. I know it's a subject everybody is enamoured with around here, but of course it is so crucial to the effective operation of government.

In reviewing a number of the points the Auditor General's office has made, one area I'm actually very pleased about, and I think it needs to be stated, is the review of the crown corporations. In the past, a lot of the public and/or members of Parliament didn't realize the extent of spending that took place through our crown corporations. From your report we see there's a marked decline in the corporations that have significant deficiencies. I think that's a good thing for all of us.

There's obviously still work to do, and the eye has to be kept on the ball, but at least there is an acknowledgement that both we, as a government--and this is obviously not a partisan issue, because the crown corporations fall within the mandate of government in general.... I think there's marked improvement, and I think kudos should go to those departments and/or agencies that have paid heed to the criticism in the past and made some progress.

There's one area that jumps out at me that I have a concern wit, and that's with the Public Health Agency of Canada--the infectious diseases. Once again it's a bit of a parallel, but I can recall in a previous report of the Auditor General with regard to public safety and security that there was a general lack of communication between the various levels of authority and the different agencies. As such, it was difficult to work cooperatively and effectively to have an achieved result.

I notice that your report again found some weaknesses in the surveillance and with the breakdown between the federal responsibilities and some of the provincial responsibilities. I'd like to know if this breakdown in communications is systemic. Is it hardware, software? Is it systems that are incompatible? Or is it actually willingness and/or ability to be able to communicate between the different levels of authorities of government?

[Sheila Fraser]

Thank you, Madam Chair.

I would like to reiterate Mr. Kramp's comments about the crown corporations and how pleased we are to see that the number of significant deficiencies has decreased, given the importance of crown corporations to the country.

On the question of the Public Health Agency of Canada, we note in the report that the agency does have systems in place, and the provinces are providing the information on a voluntary basis. It's obvious that the agency can't do its work alone. It needs the provinces, because all the health information is in the provinces. But with the exception of Ontario, there are no formal agreements. This is something we've been calling for since 1999. We did an audit in 1999 and another one in 2002 on this area, not necessarily on the agency, of course, because it was only created in 2004.

We really believe it's important that the health agency has a clear understanding with the provinces and the territories as to the kind of data that should be given to them; how it should be prepared; what standards they use to prepare this data; how quickly they should notify the health agency; who they notify; and, in the case of an outbreak, what the roles and responsibilities are. It is happening, and I think the agency will tell you it is happening informally. But we really believe that the best way to be prepared is to have more formal agreements and a clear understanding, so that if a major outbreak did occur you're not trying to sort out these issues in a time of emergency.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Quite obviously, when we have the possibilities of pandemics, etc., you're suggesting that the time to act is now. This is the time for everybody to come together.

[Sheila Fraser]

Absolutely.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Okay. We thank you for that recommendation. I'm sure this committee will take due regard of that and make the proper recommendation.

On the area of management fees in the selected departments, I don't want to necessarily pigeonhole a particular agency and department, but your statement number 9 says, “However, we found that some federal organizations do not adequately consider cost and in fact some do not know the cost”.

I would find it totally unacceptable not to have an indication of the cost. Is this once again an inability of a system to be able to bring proper accounting into place, or is it simply a management decision that's not getting us there?

[Sheila Fraser]

To be quite honest, Madam Chair, I'm not exactly sure what the basic issue is. One of the examples of not knowing the cost is the medical marijuana program, where you would think it would be relatively easy to know what the costs were, and yet they don't know the costs of that program. And just to make it clear, we're not trying to say the government should be charging the full cost, but it's certainly an element they need to consider when they establish the fee they're charging.

I believe there were other departments as well. Mr. Timmins might want to elaborate on which other ones.

[Douglas Timmins, Assistant Auditor General, Office of the Auditor General of Canada]

Thank you.

We do note, of course, that some departments did know the costs, and we did cite Parks Canada, for example, as having good costing information, and using that information in establishing the fees. Others, for various reasons, and I don't think there's any one reason, in many cases I think believe that the fees are established on a basis other than cost, and the costs are so high it's not worth pursuing the cost. But we don't think that's a basis for certain fees that should be more cost-based.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Are these departments specifically identified? If they are in the report, my apologies for not having thoroughly analyzed that, but if they're not, I would like to make sure we have those particular entities identified to this committee.

[Douglas Timmins]

Certainly. If you turn to exhibit 1.2, at the back of the report, we list the departments and the 13 fees—

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Great.

[Douglas Timmins]

—and they are mentioned as to whether they met the criteria of having the systems and practices. So it is fairly clear in the report.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you very much, and my apologies for not picking that up earlier.

Do I have time, Madam Chair?

[The Chair, Liberal, Diane Marleau]

I want to give you time. I want you to ask that question. If you don't, I will.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Okay, accrual accounting.

As you're aware, Madam Fraser, of course through the times this issue has been a priority for the public account committee, and it's obviously been a priority as well for the government operations committee. I was really pleased that we had a wonderful working group at committee and did come up with a unanimous report, making the strong suggestion that we move forward.

We noticed it did not exactly mirror every one of your requests and every one of your concerns, the idea being let's get this thing moving, let's not allow it to wait for the complete package and have it delayed for some little reason. We wanted absolute movement from the government on this. The government has now responded and are suggesting they are willing to move forward. They've identified some areas they plan on moving on immediately, a bit of a timeframe to bring in some of the other areas for the appropriations. Obviously you've read our submission on that. In it we also indicated we wished to work very closely with your department to assess the evolution of this implementation process.

Are you prepared at this particular time to express a willingness to work with the committee—I would expect that would be natural—and do you have any particular suggestions that we're going too slowly, too fast, not slowly enough, not fast enough? Obviously you would like perfection, as would we. Is the government's response reasonable at this point?

[Sheila Fraser]

Thank you.

I would like to say I was very pleased when this committee and the subcommittee took on the whole issue of accrual appropriations. I know it is not the issue that's going to be in the household flyers. That members actually spent the time to delve into this I thought was very encouraging, because it is a really important issue. I was also very pleased to see the subcommittee and this committee's report, which I thought was an excellent report and really got to the issues.

I have to say I was very disappointed in government's response. Government has not addressed many of the recommendations of the committee. The timelines are very long. After eight, ten years of study, we're still talking about more studies in 2012. So while the minister has indicated the government continues its commitment to implementing departmental accrual budgeting and appropriations over the longer time, which is the first time any government has said that, so that's encouraging, there isn't a plan to implement. This is really not a plan to implement accrual appropriations. It's going to present some future-oriented financial information departmental performance reports, and then it says it's going to summarize all this and study the implications of extending it. I thought they did that.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

More specificity, then.

[Sheila Fraser]

Well, I'd like to see a real plan to introducing it. There are probably tons of studies. They've been studying this for ten years. There was a study on the implications done by a major accounting firm that was presented to the committee. Why wait four more years to do another study? I guess I don't understand.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

This is a costly process, there's no doubt about it, both in training and staffing and in the systems evaluation and acquisition.

One of the concerns of the committee is that we don't want to go down a road and end up having to repeat or go in a different direction. And with the various models that were put forward, one of the considerations of committee and the reason for evaluation, if you wish to call it that, along the way was to move forward with a principle, a design, with an ability to be able to make some change, and then, not for a long period, simply make sure that we have some assessment. This is where your department would be so valuable, to make sure that we are going down the right way for us, getting the results that we need and spending the dollars in the direction that's going to get both you and the government in the right direction.

The suggestion was instead of buying the whole enchilada all at once, let's take a part of it and make sure we're doing it right before moving on to the next step. Do you consider that a faulty process?

[Sheila Fraser]

Well, it's sort of one of these things that you kind of do it or you don't do it. I'm not sure there are a lot of half measures in this. I guess my skepticism arises from the fact that government has been very resistant to doing this for a very long time and has indicated for years that they're studying it. So I must admit when I see the word “study” come up again, I kind of react negatively to that.

I would think that there is enough experience, just even in provinces.... There was testimony before this committee about the advantages of doing that, and how difficult, or not, it was. And that study that was done by the firm should certainly have given some indication of costs. Yes, this is not without cost, but I don't believe that what is being proposed here is really an answer to implementing accrual appropriations and accrual budgeting.