Public Accounts Committee on May 18th, 2006

[Sheila Fraser]

No.

I would just make the comment that the previous comments are Mr. Watson's comments and are not what is reflected in our audit report.

[Jeff Watson, Conservative, Essex, ON]

Certainly. I asked only the question about the meeting.

[Sheila Fraser]

In March 2003 there was $39 million of costs that were not recorded, for which we see no decision not to record. It was a commitment made by the minister that the costs would not exceed $100 million. If those costs had been recorded, the total cost would have been $117 million.

The $39 million gets recorded in the following year, which then, of course, affects the centre's financial results. And there is a decision at the end of that year not to record $21 million of costs.

[Jeff Watson, Conservative, Essex, ON]

What I am saying is there was a meeting to discuss what to do with the spending amount that exceeded the appropriation for that year.

[Sheila Fraser]

That's correct. That meeting occurred in February 2004.

[Jeff Watson, Conservative, Essex, ON]

And it was poorly recorded. Is that a violation of government policy on documenting meetings?

[Sheila Fraser]

We would have expected that meeting to have been documented, minutes to have been taken, and the rationale for the decision, yes.

[Jeff Watson, Conservative, Essex, ON]

Presumably at a meeting a number of options would have been discussed. One of them would be approaching Parliament for supplementary estimates. Correct?

[Sheila Fraser]

In fact, the Canada Firearms Centre came forward before that time and made a recommendation to ask for supplementary estimates.

[Jeff Watson, Conservative, Essex, ON]

Certainly that's not something that they...or was common practice. Seventy percent of their previous spending was obtained through supplementary estimates, so it's not unusual in a meeting of this type to consider supplementary estimates. I would imagine, especially since there was a majority government at the time, it would have been no problem to achieve those estimates.

But instead a meeting is held, not documented, that seeks a legal opinion--clearly the ultimate decision is going to be a very deliberate one if a legal opinion is involved--that decides to kick the expenditure into a following year.

The way estimates are done clearly conceals that type of critical information from Parliament. Is that safe to say?

[Sheila Fraser]

Yes.

I should clarify a couple of issues. The reason a legal opinion was obtained is the Financial Administration Act was involved and there was a discussion around what gets charged to an appropriation or not. So there is a legal aspect to this; that was why the legal opinion was sought.

The government gave its reasons for justifying why that $21 million shouldn't have been recorded, and the Canada Firearms Centre indicated an unrecorded liability of $21 million in its departmental performance report, so they felt they had made the appropriate disclosure under the circumstances.

[Jeff Watson, Conservative, Essex, ON]

Maybe this is asking an opinion here, but the true and full cost of the registry in that year was not known to Parliament. Is that fair to say?

[Sheila Fraser]

In our opinion, that $21 million should have been recorded in that year.

[Jeff Watson, Conservative, Essex, ON]

Flipping ahead here in report 2005, now a minority Parliament, not a majority Parliament, with the Liberal government obviously teetering on the brink of collapse....

Three budgets in one year and they go ahead and list a $15 million expenditure for firearms program development. They spread it out over 15 years, not in the election year. Is that correct?

[Sheila Fraser]

That was in the year ended March 2006. That's right. They had $15 million of development cost. They signed an agreement with a contractor to spread it out over 15 years and were intending to record it as the payments were made, rather than recording the costs as they were incurred, which they should do.

[Jeff Watson, Conservative, Essex, ON]

So once again costs were not fully disclosed to Parliament in that given year. Is that a correct conclusion to come up with or not?

[Sheila Fraser]

That year is not closed off yet. Let's just say I would expect them to record that correctly, because the financial statements are not completed yet, nor is the audit done.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Shawn Murphy]

Thank you very much, Mr. Watson.

Thank you very much, Mrs. Fraser.

Right now, colleagues, we're starting round two. As I indicated when we started the meeting, we are under a fairly tight timetable here, and I propose to give everyone an opportunity by reducing the second round from five minutes to four and a half. I hope nobody will take offence.

Mr. Holland.

[Mark Holland, Liberal, Ajax—Pickering, ON]

I have to cut short, Madam Fraser, saying how happy I am to see you and go straight to questions.

I want to continue on chapter 4, if I could, Madam Fraser. My principal concern is this. When I was elected in 2004, I had a great deal of concern about the costs related to the gun registry program and felt they needed to be rectified. In the audit just referred to, which came out two years prior, in 2002, there were a number of deficiencies stated and some clear and rather systemic problems noted that needed to be changed.

The problem I'm having today is that ostensibly the problems then are being used as the rationale to cancel the program today, by and large. Yet what I'm largely seeing—correct me if I'm wrong in this—in the audit today is significant progress, both in terms of curtailing those costs and of following through on a variety of the recommendations that were made. If I look in chapter 4, on page 103 in exhibit 4.2, at the items that are listed as showing satisfactory progress, we see that there is significant progress now.

My concern is this. We clearly have policy differences. This is something you obviously can't speak to. If the current government goes to the House and there's a majority of members in the House who don't believe in a gun registry for long arms, then that's a policy decision. But if the rationale is that this is a poorly managed program today that is not headed in a good direction and is in a bad spot, then that concerns me.

In my own constituency, for example—I used to be a member of the Durham Regional Police Services Board—I would talk to officers regularly and to our chief about how valuable the firearms registry was in conducting their work on a day-to-day basis. I would talk to chiefs of police in many other jurisdictions around the area as I participated in events relating to my job on that police services board, and I know how valuable it is.

I guess the part you can speak to in this debate is whether you feel the progress being made is encouraging and leads you to believe this is heading in the appropriate direction and that your recommendations are being listened to, or would you concur with the assertion, which I really feel is being made on the basis of past problems, that basically it's so poorly managed it shouldn't continue?

[The Chair, Liberal, Shawn Murphy]

That was short, for Mark.

[Sheila Fraser]

I would just comment, Mr. Chair, that we note satisfactory progress in addressing the recommendation that was made in 2002, except for the issue of the costs that weren't recorded in the right year. But that recommendation was essentially limited to financial accounting and reporting, because that was the problem at the time. We have noted, as I said, satisfactory progress in dealing with that. We also note in this report that there were many contract issues in the early years of the program and that the current management team has done a lot of work to correct the issues there.

So we have seen progress. There are still, though, remaining issues, and I would say one of the major issues in this whole discussion about the future of the registry is that the firearms centre does not give Parliament performance information. There are no outcome measures. There are no indicators of how effective the program is or what the program is accomplishing. Without those, quite frankly, I think it's hard to make an evaluation of the program.

The centre agreed with us that these needed to be in place and that they were going to begin working on them. That is a major gap at this point in time—as well as, obviously, such operational issues as the quality of the data, and the verifiers' network, and all that. The whole performance measurement is a big issue.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Holland.

Thank you, Ms. Fraser.

We'll move on now to Mr. Sweet for four and a half minutes.

[David Sweet, Conservative, Ancaster—Dundas—Flamborough—Westdale, ON]

In fact, it was really set up to fail, if you look at management principles about trying to be clear on what your goals are, your outcomes, performance standards; they just were non-existent. For years this was in place and there was no way to tell if there was any progress at all.

[Sheila Fraser]

Well, that is right. There are no performance measures for outcomes, and those should be in place for every government department and agency.