I'll start again in paragraph 6.
The CAIS program was designed to provide income support to agriculture producers when their farm income dropped due to circumstances beyond their control. At the time of our audit, Agriculture and Agri-Food Canada was receiving about 55,000 applications through CAIS every year. In the 2005-06 fiscal year, the department spent more than $1 billion on the program.
In the chapter, we noted that the CAIS program was very complex. We found that there was a lack of transparency in how the benefits were calculated. Producers did not receive, in an easy to understand manner, all the information they needed to ask for a payment adjustment or appeal an unfavourable decision.
There were long delays before producers were told whether they would receive a benefit and what the benefit would be. The department's service standard was 60 days for non-peak processing times and 90 days for peak processing times. We found that, on average, the department took 120 days to process the 2004 program year applications.
At the end of our audit, the department's records indicated that it met its service time standard for the 2005 program year applications about 38% of the time.
Furthermore, the processing of applications focused on detecting and preventing overpayments made to producers. For example, the major risk assessments test during the initial processing triggered a detailed review of applications, when there was an indication of a potential overpayment. However, there was no equivalent trigger for potential underpayments.
The review group returned about 30% of the applications it received to the initial processing group for correction, representing an error rate of about 7%, or $33 million. In our opinion, it would have been more efficient to improve its procedures to prevent errors in processing, rather than detect them during reviews at the end of the process.
The review group, in addition to other groups within the department, generated a lot of relevant information on the nature and extent of errors that were made during processing and that producers made in their applications. We noted that these data were not gathered and analyzed systematically. The department was therefore missing an opportunity to continuously improve the way it processed applications.
We also found that some department employees were acting as paid consultants, helping producers prepare their applications. This practice contravened the conflict of interest provisions and the Values and Ethics Code of the public service, and it could have provided an unfair financial advantage to some applicants. The department has since told employees to stop this activity.
Mr. Chair, in July 2007 the government announced it would replace the CAIS program with two programs, AgriInvest and AgriStability. We have not examined these programs. However, our understanding is that AgriStability is also a margin-based program for which program payments are based on similar eligibility criteria as the CAIS program, and that applications are processed in a similar manner by the same organizations. Therefore, we believe that our concerns and recommendations remain largely intact.
Following the tabling of our chapter, the department released an action plan that identified actions it had already taken and actions it planned to take to address our concerns. In addition, the department recently provided a status report on actions and progress.
As I previously stated, we have not done audit work in this area since 2006, so our ability to comment on the plans and results achieved is limited.
The committee may wish to ask the department to indicate how the actions taken have resolved the underlying problems and to demonstrate how the recommendations will be addressed with these new programs.
That concludes our opening statements. We would be pleased to answer any questions the committee may have.
Thank you.