Government Operations Committee on Oct. 8th, 2024

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Thank you, Ms. Kusie.

Next is Mr. Jowhari, please.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Once again, to the TBS and Ms. Boudreau, welcome. Thanks to you and your colleagues for coming here, and thank you for your opening remarks and testimony.

I'm going to take a bit of a step back. I'll be framing my question around two themes. One is around transfer payments and the other is around internal audit.

Starting with transfer payments, I understand that there are policies around transfer payments and there are directives around transfer payments. For average Canadians like me, can you explain the difference between policies around transfer payments and directives around transfer payments? Who are they targeted at, who is responsible for them and why? Also, why is there a need for a difference between a policy and a directive?

[Annie Boudreau]

Go ahead, Nicole.

[Nicole Thomas, Executive Director, Costing, Charging and Transfer Payments, Treasury Board Secretariat]

Yes.

Thank you for that.

The policy is really focused on the roles and responsibilities of the various players within that space and outlines—again, in the context of transfer payments—what the roles and responsibilities are in the design and implementation of transfer payments. In the case of transfer payments, that is the role of the Treasury Board, the Treasury Board Secretariat, ministers and deputy heads.

Then, when we move into the directive on transfer payments, that then provides additional information on how to operationalize your transfer payment programs and the considerations in that regard. That's really for departmental senior managers who are involved in the delivery of transfer payment programs, and in the design as well, to talk about what the requirements are for program terms and conditions and also what the requirements are for funding agreements. While we don't specify what goes into the funding agreements, we do give considerations for departments as to what we would expect them to include in those agreements.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

If I understood what you said, the policy focuses on the “how” and the directive focuses on the “what” and the different levels of responsibility: minister, deputy minister and heads. The what is really for the directors and below—is that correct?

[Nicole Thomas]

Yes. The directive provides more than—

[Majid Jowhari, Liberal, Richmond Hill, ON]

Is there a threshold? I looked at the 2022-23 fiscal grants and contributions breakdown in that department, and there were about nine items. They varied from $1.3 million to $318 million: $1.3 million for the public affairs and communications branch and $318 million for Canada wildlife services, as well as about $96 million for indigenous recipients.

When we see this range, is there a threshold that TBS sets as a level? In your response, Ms. Boudreau, you were saying, well, it depends on the amount; it depends on the risk.... I'm trying to get a better understanding of what that “depends” means.

[Annie Boudreau]

My answer about it depends on the risk was related to the internal audit function.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay.

[Annie Boudreau]

If we go back to the transfer payments, if there is a new set of terms and conditions, a new program, that has to come to the Treasury Board regardless of the amount involved. That has to come to be authorized.

Once it is authorized, there are limits that are imposed. Those limits for each department are included in what we call the matrix of delegation of authorities. Those delegations of authorities are accessible on the department's website, and you can see what the levels are for each program's terms and conditions.

[Majid Jowhari, Liberal, Richmond Hill, ON]

It's following the same standard process, regardless of whether the grant is $100,000 or $10 million. The process is the same. It's just the level of authorization that varies.

For example, in the case of the public affairs and communications branch, the allocated amount was $1.3 million. Who would be making decisions? Would it be the director level that is making decisions on the approval of these grants and contributions? Who would be making that decision?

[Annie Boudreau]

Are you talking about the approval of the amount or once it is allocated to recipients?

[Majid Jowhari, Liberal, Richmond Hill, ON]

Well, the amount that's allocated to the program is $1.3 million. That's the way I understand it. That's already agreed on between TBS and the structure of the program.

For the projects that fall under the $1.3 million or fall under the public affairs and communications branch, is there an amount that will necessitate, let's say, that the minister get involved? Or is it an amount that says, “below this threshold, the directors can approve the grant”?

[Annie Boudreau]

I would say that it is specific program by program and department by department, so for this specific question, we would need to verify and come back to the committee within 21 days.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay.

I probably have only about 20 seconds. On policies and internal audit, have you looked at the report and made any conclusion around whether the internal audit followed all the procedures? A simple yes or no within three seconds will do.

[Annie Boudreau]

Yes, I'm convinced that all the procedures were followed in terms of the policy on internal audits.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We'll go to Mrs. Vignola, please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Ms. Thomas, the results of the internal audit conducted at Environment and Climate Change Canada last June reveal serious shortcomings in its grants and contribution allocation processes, even for larger amounts that required ministerial approval.

I'd like to draw your attention to the project approval process for the Strategic Innovation Fund's Net Zero Accelerator initiative, which is described as particularly lengthy and complex. Page 8 of the 2024 fourth report of the Commissioner of the Environment and Sustainable Development states:

A project of more than $50 million also requires Treasury Board approval, concurrence letters from ministers of other concerned departments, and cabinet approval, which can be fast-tracked with a letter to the Prime Minister.

This kind of wording leaves the door somewhat open to many interpretations. In a context where various Sustainable Development Technology Canada programs are admittedly administered and benchmarked in sometimes creative ways, how can we ensure that decisions, even when the minister or Prime Minister are involved, are made impartially, without the appearance of collusion, political manoeuvring or favouritism? How do we ensure total impartiality and neutrality in awarding these contributions and grants of over $50 million?

[Nicole Thomas]

I can start by explaining the process described by the Comptroller General.

When programs and program terms and conditions are approved by Treasury Board, whether it's a grant or a contribution, we're going to have information about who can access the fund and for what purposes, that is, what objectives they want to achieve with these programs.

Subsequently, the process for awarding contracts or entering into agreements with recipients is managed within the departments, with the deputy ministers. Part of that is to have all the internal monitoring required to make sure that the business processes have all the necessary controls and approvals, so that they're compliant and consistent and everyone follows the same processes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

You are telling me that this also applies for projects that are over $50 million, where there has been an accelerated approval process authorized by the minister.

If all these processes confirm that due diligence does not show with certainty that the chosen location is the best place to invest the money, but the minister insists on investing $52 million, for example, in that location, what prevails: the weight of the minister's decision, or all the control processes that have previously been conducted by the deputy ministers and the department?

[Nicole Thomas]

Within departments, regardless of the path that approvals take, the same level of review and diligence must be ensured in deciding on these recommendations.

I don't know if Ms. Boudreau would like to add a comment.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Can the minister go against the recommendations made by his department?

[Annie Boudreau]

This is a difficult question to answer. I've never been in a situation where the minister chose to go against a recommendation I had to give. However, I can't say it will never happen.