Public Accounts Committee on Dec. 5th, 2006

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

The focus of Chapter 3 is large information technology projects. I have some concerns about two efficiency related issues. There's no question that substantial sums of money are involved. You talked about several billion dollars. I had asked you this question last time around, in conjunction with the tabling of your report. What type of corrective action should the government take? We're no longer talking about small sums of money. Very substantial amounts are involved. Spending large amounts of money on projects of this nature is not only inefficient. It borders on out and out waste.

Are you planning, or can you suggest, some measures for avoiding this kind out outrageous waste in this particular area?

[Sheila Fraser]

There are risks associated with any project with a substantial IT component, like the large projects we examined. I think that goes without saying. To minimize and control the element of risk, very rigorous management practices need to be in place. The government's IT management framework appears to be satisfactory. Admittedly, it dates back to 1998, which means that it could be updated and more recent practices adopted. However, generally speaking, the management framework is adequate. The problem we noted was that people disregard the management framework. There is no business plan that clearly sets out what a project is supposed to achieve, who the user will be and what the risks are. Sound planning is needed from the outset to identify these risks if subsequently, we want to minimize them, or least keep them in check.

Another problem was also noted with respect to organizational capacity. One would expect there to be a sound analysis of the required resources, either in terms of qualifications or numbers, to successfully carry out a project. These are perhaps the two most important factors identified in terms of shortcomings in the projects we examined.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

When you tabled your report, you also told us that you were unable to obtain certain information. Is this the first time that you have been denied access to information? I see that you're nodding your head in agreement.

[Sheila Fraser]

There was one instance in the early 1980s -- maybe it was in 1983 -- when our office was denied access to information concerning the sale of Petro-Canada.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

What guarantees do we have that your report on the two issues in questions, namely chapters 1 and 3 -- is complete and that, since a new code has been adopted, the public interest would not be served if from this moment forward, your office had access to the information it needed to complete its reports?

[Sheila Fraser]

Our two audits which focused on information technology projects and the expenditure management system respectively are incomplete because we were unable to gain access to documents and analyses that we felt we needed to have in order to properly evaluate the role of the Treasury Board Secretariat. We do not expect to gain access to them, because of an agreement whereby upon a change of government, access to confidential Cabinet papers of the previous government is denied.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Access was denied and, in your opinion, will continue to be denied.

[Sheila Fraser]

Government bureaucrats felt that access should be denied to confidential Cabinet papers.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Merci beaucoup, Monsieur Laforest.

Thank you very much, Ms. Fraser.

Mr. Fitzpatrick, eight minutes.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Good afternoon, Ms. Fraser.

I want to go to chapter 5. There was some materially inaccurate information—I'd say very serious misinformation—in the request for proposal on this matter. I think it just cries out on the injustice of this kind of a procedure.

Who was the Minister of Public Works at that time when this proposal was presented?

[Sheila Fraser]

I don't know offhand. I'm sure we could find out who it was.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Okay.

Who precisely was responsible in Public Works for designing the request for proposal?

[Sheila Fraser]

I don't know the specific person. I believe that they will be appearing. There will be a hearing on this. That might be the time to ask them those questions. I'm sorry, I don't have the specific person.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I hope the people we are bringing in are the actual people who wrote this thing up and designed it. Do you know whether we would get that close?

[The Chair, Liberal, Shawn Murphy]

[Inaudible--Editor]...whatever people he deems necessary to answer the questions.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I want to talk to the person who actually designed this thing.

Chapter 10 is one that I want to raise some questions on as well.

I've done some quick math on the fees that the company was getting for processing the health claims. According to my calculations, it's somewhere between 4% and 5%. Anybody who is familiar with, let's say, the management expense ratios on mutual funds or other things would say that once you get up to 2.5%, it seems like things are getting quite extravagant. Is there anything in here that would explain why fees would be in that region to just process claims for health claims?

[Sheila Fraser]

We only looked at the process for awarding the contract. We didn't get into the actual comparison of fees with others.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

You would have no way of making any such comparison to determine whether this is in the ballpark or if it's excessive?

[Sheila Fraser]

We would certainly expect that the department would do that when they were analyzing the bids and in their process for managing the contract.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

Okay.

Chapter 8 deals with Health Canada, and one of the issues mentioned is that it seems there are getting to be more regulations than there are the resources available to enforce things.

A few years back, I remember, the B.C. government actually went through this issue of the excessive regulatory burden of government. They actually counted the number of regulations at the provincial level that imposed obligations on people or that imposed restrictions on citizens. When they counted them all up, to my recollection it was something in the region of 450,000 at the provincial level. Then they got into the costs of trying to enforce all these regulations, not only in terms of government but also the effect on the end user. It was quite extraordinary, some of the calculations they came up with.

Have you any idea of the numbers of the federal regulations we would have? I'm not just talking about the ones that affect the bureaucracy in trying to do their job, but just the whole range of things we have here.

[Sheila Fraser]

No, we have never looked at that. I know a task force has been working for some time now around smart regulations. I'm not quite sure where they're at on all of this, but they might have some indication. I would suspect that it's in the thousands if not hundreds of thousands.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I come from the school of thought that we need a whole lot of regulation but a lot more effective regulation. It seems to me that we get into a trap in this place that every time we see some issue arrive, the simple solution is that we crank out more regulations without any regard to resources, cost, or effectiveness of the whole procedure. I'm glad you raised this in the chapter, because I think it touches on this issue in a relevant way.

I find chapter 7 to be symptomatic of what went on. I remember the mediation process for residential schools and all the money that was allocated there. The number of people who actually had gotten something sorted out on this was extraordinarily low. You almost needed a microscope to find the percentage that actually had some resolution, but there sure was a lot of money spent on the administration of it.

I find this chapter 7 to be really quite frightening. If I understand this correctly, something like 26 treaties were supposed to be negotiated starting in 1993, and although none have yet been signed up, to this stage we've spent $426 million on this process.

[Sheila Fraser]

The expectation in 1993 was that the treaties would be signed with all first nations, I think numbering over 100. Currently 40% are not participating in the process. Something over $400 million has been spent by the federal government, but the first nations in the process have also borrowed some $300 million. Then, of course, there are the provincial government costs, which are about $200 million.

[Brian Fitzpatrick, Conservative, Prince Albert, SK]

I am assuming that a lot of this is spent on negotiators.