Public Accounts Committee on May 14th, 2009

[The Chair, Liberal, Shawn Murphy]

I have to interrupt you here.

You're out of order, really. The purpose of the committee is to deal with the effectiveness, the economy, the prudence of government spending. Yes, you're saying that they could have done this, and they could have done that, but that's a decision for the government--ratified, of course, by Parliament and the estimates process. When it comes here, we normally don't get into that. I think the Auditor General's made that pretty clear on a number of occasions.

[Sheila Fraser]

Mr. Chair, in all fairness, I'd like to point out that, yes, they lapsed money in 2007-08, but in the four years previous to that, they were within their $200 million limit. We believe they have basic financial management in place. They need to have more sophisticated financial management going forward.

Personally, I have some sympathy for the department to have to manage within 1% of their budget and never go over. When you're in a situation where you can never spend more than your budget, you will always have a surplus. To manage that to within 1%.... There are not many departments that can do it.

I think the point we're trying to make here is that they need more sophisticated management tools going forward and more focus on the medium and longer term, especially given the increase in budgets that are coming, and some of the challenges that they will have with the capital acquisitions.

[The Chair, Liberal, Shawn Murphy]

You have one last question, Mr. Kania.

[Andrew Kania, Liberal, Brampton West, ON]

Let's discuss, then, other problems, such as no corporate business plan. You've identified that as another serious problem on page 2.

What effect did this have on them as well?

[Sheila Fraser]

As we note in the report, they do have plans at the operational level, but they don't have the overall corporate business plan that would be linked to the strategy. One of the issues that can come out of that is....

Well, the operational plan, I think in the immediate year, they can cope with. It's the medium and long term. Especially going into a number of projects of large capital acquisition, they have to be able to assess if that plan, over the longer term, is reasonable. Does it align with their strategy? Can it be put into operations effectively?

They need to do much better at assessing the risks. For example, one risk that we point to is human resources and the capacity to actually manage all of this and to do all of these things. You can't simply do these on an individual operational level. You need to have that overall plan in place.

[The Chair, Liberal, Shawn Murphy]

Thank you.

Mr. Weston.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

I wasn't expecting to go into chapter 5, Madam Auditor General.

In fact, I'm getting ahead of myself. Thank you for being here.

As the new member here, in Ottawa, the message I'm hearing is that we have to respect the way government operates. And, thanks to your office, mine is performing better and better. Thank you very much.

We just heard my colleague say several times that money was lost. Can you confirm that not spending money is different from losing money?

[Sheila Fraser]

Obviously, the money that was not spent was, yes, not spent.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

If one accepts that the expenditures on defence have increased dramatically under the Conservative government, wouldn't it be logical that the corporate business plan would have to catch up? We're not going into policy, but it's been said many times that the defence expenditures left men and women in uniform starved for supplies. If one was to increase the expenditures dramatically, then one would expect the business plan to have to catch up. That would be the normal thing.

[Sheila Fraser]

There would certainly have to be adjustments to the overall business plan, yes.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

It's been said that we have the best-equipped troops in Afghanistan, and so the increase in expenditure will precipitate the kind of business planning that you are recommending.

[Sheila Fraser]

Yes, but we would have expected the corporate business plan to be in place now. We could recognize that perhaps it needed adaptation because of new decisions that have been made, but we would have expected an overall corporate plan to be in place.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

I think the committee will ensure that this happens.

Let me switch to your report on Natural Resources. The chair correctly pointed out that the transactions involving conflict of interest occurred in 2003-04. Not to take a partisan approach, but that was under a previous administration. You've noticed things are getting better, and you said that the Conservative government has taken action to improve accountability and oversight within Natural Resources Canada to ensure wise expenditures of tax money.

[Sheila Fraser]

The department responded to many of the recommendations in the internal audit program, but they still do not have a policy on conflict of interest.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

It's not that a conflict of interest occurred under recent administration, but that there needs to be an improved policy to make sure it doesn't occur again.

[Sheila Fraser]

We only signalled one case that came to our attention. Because of the lack of attention and sensitivity to the matter in this department, which we also saw in Public Works and Government Services, I'm concerned that this may be occurring elsewhere as well.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

But you haven't found them--

[Sheila Fraser]

Not yet.

[Voices]

Oh, oh!

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

--you're just concerned that they could.

Let me move to innovation. Innovation is extremely important to Canadians in a time of economic uncertainty. The timing is quite remarkable, because a constituent of mine, a leader in innovation, Roger Garriock, will be in Ottawa. He teaches innovation to kids and corporations around the world.

You have commented that there is a lack of consistent approach in ensuring that the Government of Canada promotes intellectual property. You mentioned that the policy is to leave it with the contractors. I'm wondering if these two things mightn't be linked. If you're leaving it with the contractors, is it possible you're not as able to document what you're generating?

[Sheila Fraser]

We found a number of problems in the departments that we looked at. The general policy is to leave the property rights with the contractor. There are certain exceptions—property related to national security and property with a documented rationale stating that the crown should retain it. In over half the contracts we looked at, the crown was retaining the property rights without justification. There may be missed opportunities because the commercialization is not occurring.

With respect to internally generated intellectual property, we note that in spite of some significant expenditures in science and research in departments within government, there are very few inventions or patent rights being registered. I think it's probably a lack of attention. Perhaps we need to educate people on how to do it, or find a way to get government to pay more attention to this issue.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

That's important, thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you, Mr. Weston, and Ms. Fraser.

Colleagues, that concludes the final round of questioning. As we all know, the steering committee will be meeting a week from this Tuesday and will be coming back with a recommendation to the committee as to the chapters that we will hold hearings on.

We have another item of business, Madam Auditor. On behalf of everyone here, I certainly want to thank you very much not only for your excellent work but also for appearing here today.

I want to ask you if you have any closing remarks before we go to our next item on the agenda.

[Sheila Fraser]

I thank you, Chair, and all the members of the committee, for your interest in our work. We look forward to future hearings and working with you on these issues.

Thank you.

[The Chair, Liberal, Shawn Murphy]

Thank you very much.

Members, I'd like to move on to some business.

The first item is a motion that was actually tabled by Mr. Christopherson on the last day of notice. That, as far as the chair is concerned, has been resolved, and the meeting will take place on May 26, the first Tuesday when we come back. The clerk has asked me to point out that the Privy Council Office witness, although she's coming to the meeting, won't be here until 4 o'clock.

At the last meeting, we had a motion tabled by Ms. Ratansi, and someone made the motion or whatever that the motion was out of order for this committee. I heard interventions from different members, both for and against, and I just want to rule on that now. I did put some work into this, so I'll read my text.

As I said, I've heard from several members of the committee, both for and against, and I certainly want to thank them very much. I've sought the advice of the clerk and I've done my own research as to the appropriateness of this motion before this committee.

Colleagues, standing committees receive their mandates in three different ways: under Standing Orders, by an order of reference from the House, or under legislation. Pursuant to Standing Order 108(3)(g) of the House of Commons, the mandate of the Standing Committee on Public Accounts is defined as follows:

(3) The mandate of the Standing Committee on: (g) Public Accounts shall include, among other matters, review of and report on the Public Accounts of Canada and all reports of the Auditor General of Canada, which shall be severally deemed permanently referred to the Committee immediately after they are laid upon the Table; and any other matter which the House shall from time to time refer to the Standing Committee.

Some have argued that our role is to follow the work of the Auditor General, and, as a result, we are precluded from reviewing or reporting on any other matter or concern. That is not, and has never been, my interpretation of the committee's mandate. Our mandate is to review government spending. Our reviews and reports pertain to the issues of economy, efficiency, prudence, and compliance. We are not to be concerned with policy issues. We are not concerned with why things are done, but with how things are done.

However, practically speaking, since the committee does not have its own research or audit capacities, we rely almost exclusively on the Office of the Auditor General. In other words, the committee would have considerable difficulty—but is not restricted from—reviewing and reporting on issues of economy, efficiency, prudence, and compliance without the professional help that we receive on a daily basis from the Auditor General and her hundreds of staff.

My opinion is that once an expenditure has occurred, it does become an issue for this committee. Once an expenditure is made by the Government of Canada or any of its agencies, then the matter becomes part of the public accounts of this country, whether it's reported or not. The expenditure becomes part of that department or agency's statements, which in turn become part of the general statements prepared by the Receiver General for Canada. Then those statements, in turn, are audited by the Office of the Auditor General, and are eventually laid on the table as the audited statements, usually in October of each year.

There's no better example, colleagues, than the report we just heard, which was tabled in Parliament on Tuesday of this week. In particular, I did raise a question about chapter 6, entitled “Selected Contribution Agreements—Natural Resources Canada”, which reports on a number of contribution agreements, one of which was particularly troubling. The report documented blatant conflict of interest, payments being made not in the accordance with the terms of the agreement, and total mismanagement in the spending of government money.

The issue arose as a result of an internal audit, and I did put the question to the Auditor General. And Mr. Wiersema answered that any parliamentarian should have picked it up, if he or she had read it. Then it became an issue for the Auditor General, only because the department was not following up on the recommendations of the internal audit.

I use that as an example. I, as chair—and I hope you, as members, agree with me—would see no problem in the committee moving a motion to bring this issue to the public accounts committee based on the contents of the internal audit, which, according to the Auditor General and her assistant, was published on the departmental website.

I have absolutely no difficulty putting the internal auditor, the chair of the independent audit committee, and the deputy minister, the accounting officer, at the end of the table and asking them what exactly is going on in this particular department. Parliament and Canadians would have been better served, I think, if that had been done three years ago instead of today.

The motion before us is somewhat unusual, and that is why I wanted some time to give it some thought. The matter involves a request that the Comptroller General report as to the expenditures--and I underline and repeat that word--coming from vote 35.

Vote 35 is highly unusual. The wording of vote 35 is as follows:

Vote 35—Budget Implementation Initiatives Subject to the approval of the Treasury Board and between the period commencing April 1, 2009 and ending June 30, 2009, to supplement other appropriations and to provide any appropriate Ministers with appropriations for initiatives announced in the Budget of January 27, 2009,

In essence, it's a blanket appropriation. The government needed this unusual appropriation to deal quickly with the need to stimulate the economy. And we're not debating at all the need for vote 35, because as everyone knows, vote 35 was approved in Parliament.

The motion is also not looking for more specificity as to the spending intentions, nor is it looking to clarify the estimate process. The motion, as I read it, calls for a report on actual expenditures made from vote 35--in other words, moneys that have been spent. Hopefully no one would be opposed to this information coming to the committee.

In normal circumstances, to obtain an ongoing list of expenditures from a particular vote would be, in my opinion, an abuse of the powers of this committee. The vote that was passed in the estimates process would be specific, the funds being expended would come from that specific vote, and the committee would have no tools available to it to determine issues of economy, efficiency, or probity. However, given the highly unusual nature of vote 35, I do not see it as inappropriate that this committee receive this information.

The reporting requirements would not be onerous. This information is readily available to the Comptroller General. It's under his ambit, and vote 35 expires in 47 days, so the obligation would be extremely short.

I should point out that the preamble to the motion is not part of the motion. I didn't get into that in any detail at all, and I didn't consider it as to factual correctness or whatever.

I have difficulty, colleagues, with that part of the motion dealing with jobs. My first problem is that it's not the role of the Comptroller General to monitor or report on jobs, the so-called jobs created.

The second problem is that if there are any actual expenditures coming from vote 35, those would likely come under funding arrangements with other levels of government or other entities, and any reference to jobs would be second-hand or third-hand, and highly speculative.

My third problem is that the issue may be bordering on policy.

For these reasons, I am prepared to rule out of order that part of this motion dealing with jobs, which would mean the deletion of the entire second sentence after the word “vote”. So it would end at the word “vote”.

To review, I didn't spend any time on the first four paragraphs as to the factual accuracy or the veracity of the statements. The resolution would end on the second sentence under that vote. Everything else would be deleted.

That's my opinion, colleagues.

Ms. Ratansi, part of your motion is still in order, and if you're still interested, you can move the motion.

Colleagues, I'd like to hear from the mover for two minutes, and then I'm prepared to entertain up to eight interventions of one minute each, then go back to Ms. Ratansi, and then we can put the vote.