Public Accounts Committee on Feb. 12th, 2007

[The Chair, Liberal, Shawn Murphy]

I call the meeting to order. I want to welcome everyone here. Bienvenue à tous.

Members, witnesses, we're here today to deal with chapter 8 of the November 2006 Report of the Auditor General of Canada, “Allocating Funds to Regulatory Programs--Health Canada”.

We have with us, as usual, Sheila Fraser, the Auditor General. She is accompanied by Ronnie Campbell, the assistant auditor general, and Louise Dubé, a principal. From the Department of Health we have Mr. Rosenberg, the deputy minister; Susan Cartwright, the associate deputy minister; Neil Yeates, the assistant deputy minister; Susan Fletcher, assistant deputy minister, healthy environments and consumer safety branch; and Richard Charlebois, director general of the financial operations directorate.

Before I start, I understand Mr. Wrzesnewskyj has a motion and Mr. Williams has an opening statement.

Mr. Wrzesnewskyj.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you, Chair.

I have a motion, and it will be provided in both official languages to all the committee members at the end of the meeting. The motion reads:

In order to ensure that the Public Accounts Committee is fully able to get to the bottom of the serious criminal issues surrounding the findings of the Auditor General in Chapter 9 of the Auditor General's Report of November 2006 - Pension Insurance Administration - Royal Canadian Mounted Police, I move that the following persons be asked to appear as witnesses before the Public Accounts Committee on February 19, 2007: Staff Sergeant Ron Lewis: Public Service employee presently, but formerly with the RCMP, Denise Revine; Chief Superintendent Fraser Macaulay; Staff Sergeant Steve Walker; Staff Sergeant Mike Frizzell; and Assistant Commissioner Gork.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Wrzesnewskyj.

We'll debate and vote on this motion on Wednesday.

Mr. Wrzesnewskyj, you're just giving us names here. Is there any possibility, to deal with this intelligently, that you can provide--not now--the members of the committee with some kind of summary of their relevance, what you expect them to say? My point is that you're only giving us names. Perhaps you wouldn't mind giving us a three-line summary as to their relevance.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

I'd be more than happy to, Chair.

[The Chair, Liberal, Shawn Murphy]

Not now. We'll give it to the clerk and the clerk will circulate it. We will vote on this too.

[Borys Wrzesnewskyj, Liberal, Etobicoke Centre, ON]

Thank you.

[The Chair, Liberal, Shawn Murphy]

Mr. Williams, you have an opening statement.

[John Williams, Conservative, Edmonton—St. Albert, AB]

Thank you, Mr. Chairman.

Before the meeting really gets under way and before Mr. Rosenberg gives his testimony, I'd like to clarify for the record that Mr. Rosenberg never refused to appear before this committee, as we were discussing last week. Our discussion during the February 7 meeting may have inadvertently conveyed that message. So in fairness to the deputy minister, I believe the committee record should now clearly indicated that this was not the case. In fact, he was only asked to appear after the official notice had already been sent out last Wednesday. Once it was clarified that the committee wished to hear from Mr. Rosenberg, the deputy minister himself, he immediately made the necessary arrangements to be here, and we all thank him for that. We appreciate it.

[The Chair, Liberal, Shawn Murphy]

Mr. Williams, you're quite right. Perhaps I may add that it probably arose from a misunderstanding. I think we're all feeling our way with this new Accountability Act. We do expect the accounting officers to be here. To Mr. Rosenberg's great credit, I understand he had a trip to Vancouver today and he cancelled the trip to be here with the committee.

Another thing we have to do a little better as a committee, and sometimes it is difficult with our schedules that are always moving, is do a better job in giving witnesses notices of the meetings. I know the Office of the Auditor General knows they're going to be here, they have these schedules, but the other witnesses, especially the accounting officers, have to get more notice before the meetings.

We apologize for that, Mr. Rosenberg.

I want to again welcome everyone here. I understand you, Mrs. Fraser, have an opening statement, and you, Mr. Rosenberg, have an opening statement.

I invite you, Mrs. Fraser, to address the committee now.

[Sheila Fraser, Auditor General of Canada, Office of the Auditor General of Canada]

Thank you, Mr. Chair.

We thank you for this opportunity to present the results of our audit on allocating funds to regulatory programs at Health Canada. As you mentioned, I'm accompanied today by Ronnie Campbell, assistant auditor general, and Louise Dubé, principal responsible for audits of Health Canada.

This audit focuses on one of Health Canada's core roles, that of regulator. Regulatory programs for which Health Canada has primary responsibility play an important part in furthering public health and safety. The audit examined three programs that regulate the safety and use of products commonly used by Canadians, that is, consumer products such as cribs, medical devices such as pacemakers, and drug products such as prescription drugs. The audit found that Health Canada does not know if it is fully meeting its regulatory responsibilities as the regulator of product safety, medical devices, and drug products.

Health Canada needs to determine the activities that must be carried out in the three programs audited in order to meet the department's regulatory responsibilities. Program managers have indicated to management that some core compliance and enforcement activities are insufficient to protect the health and safety of Canadians. At the present time the department does not know whether they are above or below the minimum level of activity required in the three programs.

Health Canada also needs to determine the performance targets for these activities. The audit found that performance indicators have been developed for the three programs, but few have measurable targets. Without targets, it is difficult to determine what a program has achieved compared with what it was intended to achieve.

Health Canada needs to determine the level of resources required to carry out the activities necessary to meet its regulatory responsibilities. We found that Health Canada's system of allocating its resources among various branches and programs is based on the previous year's funding rather than on plans and sound financial and performance information.

The audit found that the budget for core funding for the three programs audited has significantly decreased over three years--10% for the product safety program, 32% for the drugs program, and 50% for the medical devices program. Furthermore, the total funding allocated to two of these three programs has remained constant, but the demands on the programs are increasing. This makes it difficult for program managers to fully meet the department's regulatory responsibilities of protecting the health and safety of Canadians.

These three elements together--the required activities, the defined performance targets for these activities, and the necessary resources to do this work--would provide the department with the information needed to demonstrate whether it is meeting its regulatory responsibilities and whether adequate financial resources are being allocated to regulatory programs.

We are pleased that Health Canada has agreed with our recommendations and that it has already taken steps to improve its process for allocating resources. The department has redesigned the operational planning process, which, at the time of the audit, was scheduled to be implemented in 2006-07.

Because this area is so critically important to Canadians, your committee may wish to ask Health Canada to provide you with a detailed action plan and a timetable for its implementation, and to provide the committee with regular progress reports.

Mr. Chairman, that concludes my opening statement. My colleagues and I would be pleased to answer your committee's questions.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mrs. Fraser.

Mr. Rosenberg, over to you.

[Morris Rosenberg, Deputy Minister, Department of Health]

Thank you, Mr. Chairman. On behalf of Health Canada, I'm pleased to be here today to speak to chapter 8 of the Auditor General's report from last November.

We thank the Auditor General for her report. We're pleased she has recognized that we've already made progress in this area that we're here to talk about, which is regulatory programs.

Let me say that we agree with the Auditor General's recommendations, and that in fact the department has already started work to address some of the very issues that were raised. In light of the report, we are preparing a detailed action plan, which we would be pleased to share with the committee over the course of the next couple of weeks.

Health Canada's top priority is protecting the health and safety of Canadians. Every day, our dedicated staff work to safeguard our citizens' health and safety through robust regulatory systems. I can tell you that our safety record in this regard is one of the best, according to international standards. In fact, Canada was recognized in 2002 by the Organization for Economic Co-operation and Development as a world leader in good regulatory practice and as a pioneer in the field of regulatory reform. Health Canada's role in protecting health and safety is well recognized and supported by Canadians.

That's not to say we don't face challenges, but we do continue to make progress. We appreciate the opportunity to discuss our work with you here today.

Our regulatory responsibilities are significant and broad. Just to give you an idea of the diversity, some of the areas of Health Canada's regulatory responsibilities include drugs, medical devices, and other health products; food; pesticides; consumer products and hazardous substances in the workplace; air and water quality; and toxic substances in the environment.

Regarding drugs and medical devices, as I mentioned before, our regulatory performance today measures up well. Let me give you some specific examples.

Through investments made in the 2003 budget, $190 million in that case, Health Canada has substantially improved the timelines of product reviews for drugs and medical devices while maintaining high safety standards. We've cleared the backlog of reviews and are now meeting internationally benchmarked performance standards for reviews on an ongoing basis. This means that Canadians have earlier access to the products they need.

Another example is the strengthening of Health Canada's post-market surveillance of safety and effectiveness as well as our compliance and enforcement capacity for drugs and medical devices. This was possible as a result of investments announced in the 2005 budget of $170 million over five years.

A final example is our commitment to improving transparency and openness. We are making more information available to the public about the basis upon which decisions are taken, adverse drug reactions, and product risks, as well as increasing public involvement in the regulatory decision-making process. We've also consulted with Canadians on a new policy on public input to the health products review process, which we will be implementing in the next month.

Along with our progress, Health Canada faces a number of challenges in its regulatory programs. To name a few, the department needs to respond to rapid advances in science and technology, to expected and unexpected public health challenges, and to meet public and stakeholder expectations in terms of access, safety, and transparency in addition to increasing demands for faster product approvals and increased intellectual property protection. Our work is broadening in scope, requiring multi-departmental and multi-jurisdictional action.

Canada is not unique by any means in this situation. Our regulatory counterparts around the world are facing very similar challenges.

As I mentioned earlier, Health Canada is working to strengthen our regulatory systems to better safeguard the health and safety of Canadians. In describing what we're doing, I'll note some of the key actions that address the Auditor General's recommendations on improving program management and delivery. I'm grouping these into four main areas of action: program review, cost recovery, operational planning and resource allocation, and performance management and reporting.

We start with the review of our regulatory programs. We are currently undertaking comprehensive reviews of all of our regulatory programs and activities in order to define the level of activities, performance, and resources required to meet our regulatory and other responsibilities, based on the full cost of these activities. In the health products and food branch, this review is complemented by a policy review and renewal exercise for the health products and food system. Together, these reviews will help us further strengthen the regulatory system and meet the needs of Canadians in the future. In the healthy environment and consumer safety branch, a comprehensive review and assessment of our regulatory responsibilities is also under way. They also include compliance and enforcement capacities.

Second, we're updating our cost recovery regime in the health products and food branch to ensure that the department recovers a reasonable portion of its costs for regulatory programs in the branch, including overhead costs. Fees were originally set in the 1990s and haven't been adjusted since. Now it'll be integral to the consideration of any new fee schedule as to what is the appropriate proportion of resource levels that should come from cost recovery and what should come from appropriations.

Third, as part of the strengthening of our financial management control framework, we are improving our operational planning and resource allocation process. We are also implementing a budget management framework. This means that, once funding is allocated to regulatory programs, the department has adequate tools to compare the program objectives and expected results.

These expected results and our performance against them will, in turn, help us to make prudent future funding and resource allocation and reallocation decisions. We are incorporating directives to ensure that the department complies with the conditions and decisions of Treasury Board, and builds on improvements at the branch and departmental level over the past several years.

Fourth, we're strengthening our performance measurement and reporting. The health products and food branch is revising its entire performance measurement framework, including performance indicators and targets for all of its regulatory programs. This new framework will be in place by April 1 of this year.

One further but very important note is that the HECSB's product safety program has also been investing resources to develop and implement an effective planning and performance measurement framework. There will be further work carried out as part of a branch-wide effort to enhance or establish appropriate indicators, baselines, and measurable targets toward tangible results.

In conclusion, we accept the Auditor General's recommendations, and actions are under way to implement them. Through these actions, our intention is that our well-established regulatory systems will be strengthened.

My colleagues and I are happy to answer any questions that the committee has relating to chapter 8 of the Auditor General's report.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Rosenberg.

We'll go now to the first round. Mr. Rodriguez.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you very much, Mr. Chairman.

Auditor General, ladies and gentlemen, good afternoon. Thank you for being here today.

Ms. Fraser, one of the comments in your presentation made me smile. You stated that:

[...] Health Canada does not know if it is fully meeting its regulatory responsibilities as the regulator of product safety, medical devices and drug products.

So the department does not know whether it is fully meeting its responsibilities. I find that comment somewhat strange. We do not usually see that kind of observation. We hear that a department is not carrying out its responsibilities properly or not at all, but we do not hear that it does not know whether it is doing so.

Could you perhaps explain that a bit, please?

[Sheila Fraser]

Yes.

Basically, our audits do not include program evaluation, and that is very clear in the Auditor General Act. We audit whether the departments have measures and ways of evaluating their effectiveness and efficiency.

So when it comes to regulatory programs, we expected that the department would know what kinds of activities it needed to carry out to meet its requirements with respect to activities; then the resources would be allocated on that basis. What we found in our audit was that the department had not specified the activities or level of activity that were to be carried out.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you.

At this point, Mr. Rosenberg, are you in a better position to know whether you are carrying out your responsibilities fully?

[Morris Rosenberg]

To begin with, I would like to say that there are certain activities that are ongoing, and international comparisons by the Organization for Economic Co-operation and Development in Paris show that Canada's performance is very good compared with that of other countries that regulate the same areas.

In carrying out our responsibilities from day to day we take an almost continuous risk-assessment approach. For example, it came to our attention in 2004 that there were risks involving Vioxx and other similar drugs. We took immediate action to invest resources in order to deal with the problems, to try to regulate that area, which included asking cabinet, and eventually Parliament for new resources.

We make adjustments every day.

I would also say, in response to the criticism in the Auditor General's report, that we can improve our planning system. As I said in my opening remarks, Health Canada is doing a great deal to improve its planning in order to be able to determine the exact level of activity that it needs to undertake.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

On that point, I read the report and a comment on page 2 caught my attention. The Auditor General wrote: "Program managers do not always have complete information to decide on how best to allocate their resources."

A little further on, she added: "This makes it difficult for program managers to determine the level of funding each activity needs if it is to provide Canadians with the appropriate level of protection."

Has the situation improved now?

[Morris Rosenberg]

That does not mean that there are no resources. There are resources. However, it is a question of whether they properly reflect the scope of the challenges being dealt with. I believe that, generally speaking, we do carry out our mandate. That said, it is always possible to improve the way we do things.

In government, and especially at Health Canada, planning is a work in progress. I believe that we are moving forward with the changes implemented recently to respond to the Auditor General's report. In fact, we brought in changes before that. For several years, we have been working on improving our planning process.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Do you have enough money? Do you want more money?

[Morris Rosenberg]

From an overall standpoint, I would say we do have enough. In cases where we find that there is more risk, there are risk management processes in the department that allow us to make adjustments.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

What I want to know is whether you feel that you have enough resources to carry out your role.

[Morris Rosenberg]

From my understanding of our challenges, I would say that we have adequate resources. But we will continue to assess whether, in the context or the environment, there are other risks. If so, we will ask to be able to reallocate resources within the department or, if necessary, request new resources from the government.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

If I understand correctly, you are working on a detailed action plan that you will table.

[Morris Rosenberg]

Yes. I intend to table this detailed action plan that will be ready by the end of February.